Samvardhana Motherson International Limited — Q1 FY26 earnings call

Call held 13 Aug 2025

Management summary

SAMIL delivered resilient performance in a challenging Q1 FY'26 with highest ever quarterly revenues of Rs. 30,200 crores despite multiple headwinds including tariff uncertainty, geopolitical conflicts, and structural issues in developed markets. The company proactively launched transformative measures in Europe and maintained its globally local strategy to mitigate tariff impacts. While profitability faced transitory pressure, management expressed confidence about recovery in Q3-Q4 driven by restructuring benefits, new program launches, and operational improvements.

Highlights

  • Highest ever quarterly revenues at Rs. 30,200 crores with 5% YoY growth

  • EBITDA of Rs. 2,466 crores, normalized PAT of Rs. 667 crores

  • Navigating challenging business environment with multiple headwinds

  • Launched EUR 50 million transformative measures in Central and West Europe

  • Booked provisions of Rs. 136 crores for European restructuring with <1 year payback

  • Consumer electronics business on track with second facility commissioning in Q2

  • Minimal tariff impact due to globally local strategy

  • Working capital expanded due to supply chain uncertainty

  • Strong order book and customer relationships maintained

Concerns

  • European market structural issues and volume uncertainties

Key financials

2 periods

Headline

  • Total Revenue
    ₹30,200 Cr
    YoY +5%
  • EBITDA
    ₹2,466 Cr
    YoY -15%
  • Normalized PAT
    ₹667 Cr
    YoY -25%
  • Net Debt to EBITDA
    1.1×
    YoY +10%

Q1

  • CAPEX
    ₹1,200 Cr
    YoY 0%

What they filed

Q1 FY27: revenue up 16.7%, net profit up 77.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue27,812 27,666 29,317 30,212 30,173 +8%31,409 +14%34,309 +17%35,244 +17%
EBITDA2,448 2,686 2,643 2,458 2,611 +7%3,043 +13%3,791 +43%3,096 +26%
Net profit949 984 1,115 606 846 −11%1,072 +9%1,562 +40%1,076 +78%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

CAPEX

  • Annual CAPEX CAPEX · FY'26 · Medium confidence Rs. 6,000 crores plus/minus 10%
    For the year, we are still guiding towards the INR 6,000 crores plus/minus 10%

    — Kunal Malani

Recovery

  • European Restructuring Payback Recovery · Next 3-4 quarters · High confidence Less than 1 year payback
    This will have a payback of less than a year

    — Laksh Vaaman Sehgal

Cost Savings

  • European Transformative Measures Cost Savings · Next few years · High confidence EUR 50 million cost savings
    transformative measures in Central and West Europe aimed at delivering cost savings of EUR 50 million over the next few years

    — Laksh Vaaman Sehgal

Consumer Electronics

  • Production Capacity Consumer Electronics · End of FY'26 · High confidence 15-17 million units
    we should be able to ramp up to somewhere between the 15 million to 17 million unit levels by the end of FY '26

    — Kunal Malani

Performance

  • Quarterly Recovery Performance · Q2-Q4 FY'26 · High confidence Better performance than Q1
    at a reported level, this will probably be the lower end of our quarter. So the next few quarters, and right till the end of the year should be looking better

    — Kunal Malani

Risks & concerns

  • European market structural issues and volume uncertainties

    high

    EUR 50 million cost reduction program launched with Rs. 136 crores provisions booked for transformation measures

    Proactive restructuring and cost reduction measures

  • Working capital expansion due to supply chain uncertainties

    medium

    Working capital expanded due to tariff uncertainty, geopolitical tensions, and regulatory payment term changes - expected to normalize with clarity

    Temporary and expected to reverse

  • Margin pressure in key divisions during transition

    medium

    Modules & Polymer margins declined to 6.4%, Emerging Business margins pressured by ramp-up costs and integration activities

    Confident about q3-q4 recovery

  • Dependence on large consumer electronics facility ramp-up

    medium

    Major facility commissioning in Q2 critical for achieving 15-17 million unit capacity target by end of FY'26

    On track with customer support

  • Leverage increase due to working capital and forex translation

    low

    Net debt to EBITDA at 1.1x with Rs. 600 crores forex translation impact, expected to improve through operational measures

    Within comfort zone with deleveraging plan

Q&A highlights

5 direct
Tariff impact on automotive vs consumer electronics business Direct
Currently, there's no impact on the consumer electronics business. The business is pulling as per the demand of the customer, and it's exempt from the U.S. tariff

Clarifies that consumer electronics business is protected from U.S. tariff impacts

Asked by Aditya Jhawar (Investec)

European margin deterioration and recovery timeline Direct
Q3 and Q4 should show very strong performance... we're almost at the tail end of all the transformation that we need to do

Provides specific timeline for recovery in the most affected division

Asked by Pramod Amthe (InCred Equities)

Organic growth calculation excluding acquisitions Direct
Atsumitec has added around about INR700-odd crores... excluding Atsumitec, it is a 2% growth

Quantifies organic vs inorganic growth components

Asked by Raghu Nandhan (Nuvama)

Working capital expansion drivers and reversal timeline Direct
driven off how the entire tariff structures played out... lack of clarity meant you had to continue keeping some of the excess working capital... All of these, we believe, are transitory in nature

Explains temporary nature of working capital spike and expected reversal

Asked by Gunjan P. (Bank of America)

M&A strategy changes due to tariff environment Direct
Motherson has always grown exponentially in time of crisis... the goodness of our thinking and the focus of being outside India being in the local country where we are producing, that has paid off very well

Reinforces strategy validation and continued M&A focus during volatile times

Asked by Pramod Amthe (InCred Equities)

2 min read 5 chapters

Detailed narrative

Resilient Revenue Performance Amid Multiple Headwinds

SAMIL achieved highest ever quarterly revenues of Rs. 30,200 crores with 5% YoY growth despite facing unprecedented challenges including tariff-induced volatility, geopolitical conflicts, and structural issues in developed markets. Global light vehicle industry grew only 1.7% with developed markets (Europe, North America) declining 4% while emerging markets (India, China) drove growth. The company's diversified business model and well-executed M&A strategy enabled outperformance versus industry trends.

Proactive European Restructuring for Long-term Competitiveness

Management launched comprehensive transformative measures in Central and West Europe targeting EUR 50 million cost savings over coming years. The company booked Rs. 136 crores provisions in Q1 for restructuring with payback period under one year. This includes alignment with works councils, footprint optimization, and capability consolidation across the 23 acquisitions made during challenging market conditions. The measures address structural issues and position the region for recovery.

Globally Local Strategy Validates Tariff Resilience

Motherson's longstanding strategy of 'source locally, produce locally, supply locally' proved highly effective against tariff volatility. U.S. exports from India limited to under $10 million in Q1, majority of U.S. sales are USMCA compliant through 25+ U.S. plants and Mexico operations. The company engages in constructive customer discussions for non-compliant portions with lead-lag pass-through mechanisms, demonstrating relationship strength and contract protections.

Consumer Electronics and Aerospace Growth Trajectory Maintained

Consumer electronics business remains exempt from U.S. tariffs with second facility commissioning in Q2 and capacity target of 15-17 million units by end FY'26 on track. Customer demand continues growing with no indication of slowdown. Aerospace business faced seasonal weakness in Q1 with one greenfield deferred in alignment with customer build-out rates, but overall ramp-up trajectory remains positive. Non-automotive business achieved 40% YoY growth demonstrating diversification success.

Temporary Profitability Pressure with Clear Recovery Path

EBITDA and normalized PAT faced pressure from European restructuring, greenfield ramp-up costs, Atsumitec integration, and working capital expansion. Management characterized Q1 as 'lower end of quarters' with strong confidence in Q3-Q4 recovery driven by: European transformation benefits, new program launches in H2, operational efficiency improvements, working capital normalization, and better seasonal patterns. The company maintains strong balance sheet with 1.1x leverage providing flexibility for opportunities.

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