Samvardhana Motherson International (SAMIL), an auto ancillary firm, saw its shares rise by 10% to reach a new 52-week high of ₹93.65 per share during Wednesday's trading session.
This surge came after the company announced in an exchange filing on Tuesday that its wholly owned subsidiary, SMRP B.V., had entered into an agreement to acquire an 81% stake in the 4W business of Yachiyo Industry, a subsidiary of Honda Motor.
Yachiyo Industry, incorporated on August 27, 1953, is a renowned supplier of sunroofs, fuel tanks, and bumpers, with manufacturing facilities and R&D centres in multiple countries, including Japan, China, United States, Thailand, Brazil, India, Indonesia, and Mexico.
As part of the transaction, Honda Motor will initially acquire the entire public stake in Listed Yachiyo through a tender offer, making Listed Yachiyo a wholly-owned subsidiary. The 2W business of Listed Yachiyo, housed under Goshi, will be transferred to Honda Motor. Subsequently, Samvardhana Motherson International will acquire an 81% equity stake in the remaining Yachiyo 4W business, resulting in an 81:19 joint venture with Honda Motor, the company said in an exchange filing.
This deal will enable Motherson to cross-sell its products to Honda and offer Yachiyo products (sunroofs and fuel tanks) to other OEMs. However, this will take 3–4 years to reflect in the financials of Motherson, said domestic brokerage firm Motilal Oswal.
Products like plastic tailgates and type-4 hydrogen pressure containers would be offered to customers, which would offset the decline in the company’s present fuel tank business (41% of FY23 revenues) as EVs scale up, the brokerage added.
The brokerage also said that the company has made an investment of $14 million via a 12% optionally convertible secured note of Prysm Systems, which manufactures large-format touchscreens with embedded collaborative software. Prysm is developing a new ‘Gen-3’ prototype for mass production. After the successful delivery of the Gen-3 prototype by 4QFY24, SAMIL would further invest $20 million and convert secured note to equity for a majority stake in Prysm, it stated.
Further, the brokerage retained its 'buy' rating on the stock and raised its target price to ₹105 apiece from its December target price of ₹95. This new target price indicates an upside of 15% from the stock's last trading price.
Motherson shares underperformed the market in CY22, losing 34% of their value. However, they have rebounded strongly this year, with a gain of 22.45% so far.
SAMIL is a diversified global manufacturing specialist and one of the world’s largest and fastest-growing automotive suppliers for OEMs. The company has more than 300 facilities across 41 countries.
The stock closed 6% higher at ₹90 on the BSE on Wednesday.
18 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
