Given the volume growth concerns in the auto space, the company is eyeing growth in non-auto segments while focusing on improving market share through acquisitions and increasing content per vehicle. At the current price (₹165), SAMIL stock, which has gained 56 per cent over the last year, is trading at about 21 times its FY28 earnings estimates. About 85 per cent of analysts tracking the stock have a buy rating on it, with a Bloomberg consensus target price of ₹185.
The company reported consolidated revenue growth of 27 per cent year-on-year (Y-o-Y) and 9 per cent on a sequential basis. Strong growth for SAMIL was driven by robust performance in wiring harnesses, integration of acquisitions and emerging businesses. While wiring harnesses saw 68 per cent growth Y-o-Y, a third of this growth came from the integration of the acquired Nexans Autoelectric operations. The Nexans acquisition was completed in July this year. Emerging business segments, which include aerospace, health and medical, and logistics solutions, among others, saw a 61 per cent jump Y-o-Y in the quarter.
The company is optimistic about growth despite weak global light vehicle production (-2.3 per cent Y-o-Y), backed by a record order book of $106 billion ($96 billion in FY26). The Autoelectric and Yutaka Giken acquisitions should add $2 billion in revenue in their first full year, with margins improving through integration.
JM Financial Research expects SAMIL to continue to outperform global automobile sales, fuelled by rising premiumisation and the electric vehicle (EV) transition, a robust order backlog in auto and non-auto segments, and successful integration of recent acquisitions. Growth drivers from here, according to analysts led by Aniket Mhatre, include strong demand in the Indian auto market, US contract wins over the next couple of years, continued strength in US commercial vehicles and the scale-up of non-auto businesses, particularly consumer electronics and aerospace. The brokerage has a buy rating with a target price of ₹205.
The company’s operating profit margin stood at 8.8 per cent, 10 basis points higher than in the year-ago quarter and flat on a sequential basis, missing estimates of some brokerages. Margins for the modules and polymer and integrated assemblies segments improved Y-o-Y by 90 basis points and 10 basis points to 8.3 per cent and 12.3 per cent, respectively. However, they declined for the wiring harness and emerging segments by 50 basis points and 110 basis points to 10 per cent and 8.4 per cent, respectively. The margin for the vision systems segment remained stable Y-o-Y at 9.2 per cent.
Nomura Research expects organic growth in SAMIL’s global subsidiaries to remain subdued given the weakness in the auto sector. However, a ramp-up in the non-auto segment (consumer electronics, aerospace) from 10 per cent in FY27 to 16 per cent by FY29 and market share gains in auto, led by the integration of new acquisitions, should support growth momentum.
Analysts led by Kapil Singh of the brokerage believe that strong cost-control initiatives in an inflationary environment have been commendable, and they expect operating profit margins to remain at 10 per cent over FY27-29. With free cash flow yields of 6-7 per cent (FY28/29), further potential exists for acquisition-driven growth, they add. The brokerage has a buy rating and has raised its target price from ₹171 to ₹191.
