Samvardhana Motherson International Limited
Q1 FY26
Call date · August 13, 2025
1 · Management Commentary
Key Positives
- Achieved highest ever quarterly revenues at INR 30,200 crores, with 5% YoY growth despite industry headwinds.
- EBITDA at INR 2,466 crores; normalized PAT at INR 667 crores.
- Strong performance in emerging markets (India, China); non-automotive business grew ~40% YoY.
- Successfully operationalized 3 greenfield units; 11 more facilities in progress.
- Capex guidance maintained; robust balance sheet with net debt/EBITDA at 1.1x.
Key Negatives
- Profitability impacted by evolving trade policies, geopolitical conflicts, forex volatility, and structural issues in developed markets.
- Commercial vehicle segment in North America degrew 29% YoY; Europe and North America light vehicle markets declined 4%.
- Margins in modules and polymer products, and emerging businesses, declined due to upfront costs, integration of acquisitions, and seasonality.
- Working capital increased due to supply chain uncertainty and regulatory changes.
Forward Guidance
- Capex for FY26 guided at INR 6,000 crores (+/-10%); INR 1,200 crores spent in Q1.
- 8 new plants to be commissioned in FY26; largest consumer electronics facility to come on stream in Q2 FY26.
- Transformative cost-saving measures in Central and West Europe targeting EUR 50 million over next few years; payback <1 year.
- Ongoing integration of recent acquisitions (e.g., Atsumitec) expected to improve profitability in H2.
- Revenue and margin outlook expected to improve from Q3/Q4 as new launches and restructuring benefits flow through.
- M&A pipeline remains strong; company expects to capitalize on opportunities amid industry volatility.
2 · Q&A Highlights
Q 1 (Composite): What is the impact of US tariffs on auto and consumer businesses, and how is the company positioned?
A (Management):
• Negligible impact on auto business; consumer electronics business currently exempt from US tariffs.
• Majority of US sales are USMCA compliant; export content to US from India < $10 million in Q1.
• Ongoing discussions with customers to pass on any tariff-related costs.
Q 2 (Composite): Details on capex incurred, greenfield ramp-up, and revenue scalability, especially in consumer electronics and new JV (sunroof/roof systems)?
A (Management):
• Q1 capex at INR 1,200 crores; FY26 guidance INR 6,000 crores (+/-10%).
• Largest consumer electronics facility to be operational in Q2 FY26; ramp-up to 15–17 million units capacity by end-FY26 remains on track.
• Sunroof/roof JV capex is low; high ROCE expected; ramp-up to be quick due to in-sourcing opportunities.
Q 3 (Composite): Margin decline in modules, polymer products, and emerging businesses—drivers and outlook?
A (Management):
• Margin decline due to upfront costs for greenfields, integration of acquisitions, and seasonality (esp. aerospace, commercial vehicles).
• Structural and transitional issues in Europe being addressed via cost-saving measures; benefits expected from Q3/Q4.
• No loss of pricing power or contracts; order book remains strong.
Q 4 (Composite): Working capital increase and debt—causes and expected trajectory?
A (Management):
• Increase due to supply chain uncertainty, tariff/geopolitical risks, and regulatory payment term changes.
• Measures underway to optimize working capital; expect declining trend in H2 FY26, though September may see a seasonal peak.
Q 5 (Composite): M&A strategy in light of tariffs and industry volatility; outlook for acquisitions?
A (Management):
• No change in strategy; volatility creates opportunities.
• Strong balance sheet (1.1x leverage) provides headroom; pipeline remains robust.
• Acquisitions typically at customer behest; expect active period ahead.
Q 6 (Composite): Revenue contribution from recent acquisitions (e.g., Atsumitec), and organic vs. inorganic growth?
A (Management):
• Atsumitec contributed ~INR 700 crores in Q1; excluding this, organic growth was 2% YoY.
• Company views M&A as integral to growth strategy.
Q 7 (Composite): Chinese competition in Europe and global markets—company’s preparedness?
A (Management):
• Not a near-term threat; company has deep presence in China (30+ facilities) and supplies to Chinese OEMs.
• Well positioned to benefit if Chinese OEMs expand globally.
3 · Other Key Numbers
- Q1 FY26 Revenue: INR 30,200 crores
- Q1 FY26 EBITDA: INR 2,466 crores
- Q1 FY26 Normalized PAT: INR 667 crores
- Capex in Q1 FY26: INR 1,200 crores
- FY26 Capex guidance: INR 6,000 crores (+/-10%)
- Net effective debt-to-EBITDA: 1.1x
- Provision booked for European restructuring: INR 136 crores (cash out over next 3 quarters)
- Translation impact on debt due to forex: INR 600 crores
- Export content to US from India in Q1: < $10 million
- Commercial vehicle North America YoY decline: 29%
- Global light vehicle industry YoY growth: 1.7% (growth in India/China; Europe/NA -4%)
- Non-automotive business YoY growth: ~40%
- Atsumitec Q1 revenue contribution: ~INR 700 crores
- Greenfield units operationalized in Q1: 3; additional facilities in progress: 11
- Targeted cost savings in Central/West Europe: EUR 50 million over next few years
- Consumer electronics ramp-up target: 15–17 million units by end-FY26
- Growth capex in FY25: INR 2,000 crores; planned in FY26: INR 3,000 crores
- Number of new plants added in FY25: 10; planned in FY26: 8
- Next investor conference: September 5, 2025 (Mumbai)
Any other figures not listed above were not disclosed in the call.