Samvardhana Motherson International Limited

Samvardhana Motherson International Limited reported a strong Q2 FY26, with revenues reaching ₹30,173 crores, marking an 8.5% year-on-year growth. The company achieved an EBITDA of ₹2,719 crores and a normalised PAT of ₹856 crores, both demonstrating double-digit growth over the same period last year. This performance reflects solid operational momentum and financial discipline, despite an evolving external environment. The company's ROCE stood at 14.2% as of September 2025.

The company's transformative measures, particularly in Western and Central Europe, are yielding positive results, especially in the polymer business. Profitability in the polymer business improved from 6.4% to 7.4% on a sequential basis, even during a seasonally weak quarter. Management indicated that 75-80% of the initial restructuring plan for the modules and polymer division is complete, with further efficiencies targeted. Investments in plant upgrades, including paint shops, have been made to enhance quality and relevance.

Samvardhana Motherson invested approximately ₹2,600 crores in CAPEX during the first half of FY26, with the full-year guidance revised to the upper end of ₹6,000 crores plus 10%. This investment supports growth ambitions, including the operationalization of two new greenfield facilities and 10 more in various stages of completion, with most expected by FY27. The company also plans to add over 5,000 engineers in the next five years to bolster its competency in global business services and AI platforms.

The aerospace business delivered a robust 37% revenue growth in H1 FY26, benefiting from its Tier 1 status with Airbus and advanced discussions for complex, high-value packages. The consumer electronics business showed significant momentum, growing 36% quarter-on-quarter, with two plants now operational. This segment is expected to achieve positive profitability in its first full year of operations, with the largest plant scheduled to come online in the latter half of FY27. The combined booked business for consumer electronics and aerospace increased to $3 billion from $2.7 billion in March 2025.

The company maintained a stable leverage ratio of 1.1x net effective debt to EBITDA at the end of Q2 FY26, with a target to reduce it to around 0.9x by year-end through improved business profile, free cash flows, and working capital management. Management expressed optimism for stronger performance in the second half of the year, anticipating further acceleration of improvements and benefits from new program launches. Global light vehicle production grew 3% year-on-year to 22.2 million vehicles, with the full-year forecast converging around 90 million units.

The company's total booked business stood at $87.2 billion as of September 2025, executable over the next five to six years. While the current EV revenue share is 11%, the EV share in the order book has slightly decreased from 24% to 22%. This shift is attributed to new non-EV powertrain launches and a recalibration of anticipated EV volume trajectories. Management emphasized a balanced approach to the EV transition, noting that new platforms often offer both EV and non-EV variants, ensuring the company's portfolio is engine-agnostic.

The company incurred approximately $10 million in tariff-related costs on its P&L, which will have a lead-lag effect. Management is actively engaging with customers to discuss how to share this financial impact, leveraging its strong relationship-based business model. The company's strategy of local sourcing, production, and supply helps mitigate such external volatilities, and they are confident in finding a solution to recover these costs.