On Wednesday, Citi updated its stance on Samvardhana (NS:SAMD) Motherson International (MOTHERSO:IN), raising the price target to INR105.00 from INR105.00, while reiterating a Sell rating on the stock. The firm acknowledged the company's first-quarter financial year 2025 (1QFY25) results, which showed revenue in line with forecasts but a decrease in profit margins, particularly in key segments such as modules & polymer, vision systems, and emerging businesses.
The analyst noted that although demand in Europe continues to be weak, there are positive signs in the Indian and Chinese markets. Samvardhana Motherson International's strategic moves toward diversification, including non-automotive segments and inorganic growth through acquisitions, have been contributing to its revenue expansion.
However, Citi maintains a cautious outlook on the global demand which underpins the Sell rating. The firm anticipates that the ramping up of new greenfield plants and the integration of recent acquisitions might exert further pressure on the company's profit margins.
Citi's revised price target reflects the inclusion of these new acquisitions into their forecasts, along with adjustments made to account for recent changes in the corporate structure of Samvardhana Motherson International.
Despite the adjusted price target, the firm's cautious view remains, suggesting that potential challenges lie ahead for the company.
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