Samvardhana Motherson International Limited — Q4 FY25 earnings call

Call held 29 May 2025

Management summary

SAMIL delivered exceptional performance in FY'25 marking its 50th anniversary with best-ever results across all metrics. Despite challenging global environment with 1% decline in global auto production, the company achieved 15% revenue growth, 17% EBITDA growth, and remarkable 40% PAT growth. The successful completion of Vision 2025 with 19% revenue CAGR, 21% EBITDA CAGR, and 68% PAT CAGR over 5 years demonstrates the strength of its diversified business model. The company announced ambitious Vision 2030 target of $108 billion revenue while maintaining 40% ROCE, supported by strong momentum in non-automotive segments.

Highlights

  • Celebrating 50th anniversary milestone - from Rs. 1,000 to Rs. 1.13 lakh crores net revenue

  • Best-ever performance with revenues of Rs. 113,600 crores (15% YoY growth)

  • EBITDA rose 17% to Rs. 10,877 crores, PAT surged 40% to Rs. 3,803 crores

  • Board recommended 1:2 bonus issue (1 bonus share for every 2 shares held)

  • Vision 2030 target announced at $108 billion revenue with 40% ROCE

  • Record 23 acquisitions integrated successfully during 5-year period

  • Strong order book of $88 billion providing long-term visibility

  • Net debt-to-EBITDA at historic low of 0.9x despite massive growth investments

  • Non-automotive order book at $2.7 billion with aerospace contributing $1.3 billion

  • Consumer electronics on track for 15-17 million units capacity by end FY'26

Key financials

  1. Total Revenue (FY'25) ₹1.14L Cr +15%YoY
  2. EBITDA (FY'25) ₹10,877 Cr +17%YoY
  3. PAT - Concerned Share (FY'25) ₹3,803 Cr +40%YoY
  4. ROCE (FY'25) 17.2% +15%YoY
  5. Net Debt to EBITDA 0.9× -20%YoY
  6. Order Book $88 Bn +5%YoY

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

Vision 2030

  • Revenue Target Vision 2030 · 2030 · High confidence $108 billion
    The number of all the groups and everything put together, we are targeting for 2030 will be US$108 billion on the top line

    — Vivek Chaand Sehgal

  • ROCE Target Vision 2030 · 2030 · High confidence 40%
    of course, the ROCE remains same at 40%

    — Vivek Chaand Sehgal

CAPEX

  • Annual Investment CAPEX · Next year (FY'26) · High confidence Rs. 6,000 crores plus/minus 10%
    our capex guidance for the next year and including for our existing business is about INR 6,000 crores plus or minus 10%. 50% of this is regular capex and 50% is purely growth-oriented

    — Laksh Vaaman Sehgal

Consumer Electronics

  • Production Capacity Consumer Electronics · End of FY'26 · High confidence 15-17 million units
    Consumer electronics is having a very rapid ramp-up and is on track to reach a capacity of 15 to 17 million units by the end of FY '26

    — Laksh Vaaman Sehgal

Cost Optimization

  • European Transformative Measures Cost Optimization · Next couple of years · High confidence EUR 50 million cost savings
    series of transformative measures in Western and Central Europe to breathe with the market, enabling a cost block optimization of approximately EUR 50 million

    — Laksh Vaaman Sehgal

Risks & concerns

  • Working capital expansion of Rs. 2,000 crores due to trade uncertainties

    medium

    Working capital expanded due to trade policy uncertainties leading to pre-buying and safety stock buildup in March 2025, expected to reduce in ensuing quarters

    Temporary with normalization expected

  • Execution challenges in Modules & Polymer division affecting margins

    medium

    Division faced launch issues and European production realignment with 8-9% auto production decline, but transformative measures targeting EUR 50 million savings already initiated

    Confident about recovery with worst behind

  • European market structural changes and EV transition uncertainties

    medium

    Customers still figuring out EV portfolios with mixed success rates, but company's diversified approach and local presence provide resilience

    Proactive adaptation with transformative measures

  • Ambitious Vision 2030 target requiring flawless execution

    medium

    $108 billion target represents massive scale increase requiring continued success in diversification, M&A integration, and operational excellence

    Confident based on track record and pipeline

  • Aerospace division margin pressure from AD Industries integration

    low

    Acquired struggling unit requiring turnaround efforts, but strong revenue growth and customer relationships provide foundation for margin recovery

    Gradual improvement expected with synergies

Q&A highlights

4 direct
Non-automotive order book composition and growth drivers Partial
It's coming from all of the others. Of course, consumer electronics is also growing at a fast pace... they're a mix of all the other businesses, and we expect this to grow even further

Provides insight into diversification beyond automotive with $2.7 billion non-auto order book split between aerospace ($1.3B) and other emerging businesses

Asked by Binay (Morgan Stanley)

Vision 2030 target announcement and investor conference Direct
The number of all the groups and everything put together, we are targeting for 2030 will be US$108 billion on the top line. And of course, the ROCE remains same at 40%

Major strategic announcement revealing ambitious growth targets and upcoming September investor conference for detailed roadmap

Asked by Amyn Pirani (JPMorgan)

Modules & Polymer division challenges and recovery outlook Direct
we did have a couple of launches that perhaps did not go exactly as per -- as we had planned... Definitely, from the way I see it, that the worst is behind us. The pickup in the margins should only be positive from here

Management acknowledges execution issues but expresses confidence about recovery with transformative measures already announced

Asked by Kapil Singh (Nomura)

Global supply chain shifts and Motherson's positioning Direct
we are not a company that wants to do a lot of exports. All our plants are local... definitely, whenever there are shifts like these, we have a good opportunity to grow because of our geographical presence

Reinforces globally-local strategy advantages in current trade environment and positions company well for supply chain reshoring trends

Asked by Raghu Nandhan (Nuvama)

Acquisition strategy and customer-backed approach Direct
I have always been guiding my people that you have to make sure that a customer is standing behind asking for that particular acquisition... all the acquisitions that we do are -- there's a customer standing behind it

Clarifies disciplined M&A approach with customer validation ensuring success rate, explaining why 47 acquisitions are performing well

Asked by Kapil Singh (Nomura)

2 min read 5 chapters

Detailed narrative

Golden Anniversary with Record-Breaking Performance

FY'25 marked Motherson's 50th anniversary with exceptional financial performance, delivering best-ever results across all metrics. From humble beginnings with Rs. 1,000 investment in 1975, the company achieved Rs. 113,600 crores net revenue, demonstrating the power of disciplined reinvestment and execution. The board announced a 1:2 bonus issue to celebrate this milestone, while Vision 2025 concluded successfully with 19% revenue CAGR, 21% EBITDA CAGR, and remarkable 68% PAT CAGR over the 5-year period despite unprecedented global challenges including COVID, semiconductor shortages, and geopolitical conflicts.

Diversification Strategy Delivering Results Beyond Automotive

The company's strategic diversification into aerospace and consumer electronics gained significant momentum. Aerospace business achieved 5x growth in one year, became Tier 1 supplier to Airbus, and built a $1.3 billion order book. Consumer electronics rapidly ramped up with first plant achieving record-time commissioning and targeting 15-17 million units capacity by end FY'26. Vision Systems vertical secured $400+ million lifetime sales in CV camera monitoring systems. Total non-automotive order book reached $2.7 billion, validating the expansion strategy.

Vision 2030 - Ambitious Growth Roadmap Unveiled

Management revealed Vision 2030 target of $108 billion revenue while maintaining 40% ROCE, representing massive scale expansion from current $25.7 billion gross revenue base. The announcement builds on proven execution track record with all 47 acquisitions performing well due to customer-backed approach. September investor conference will detail the roadmap, but early indicators suggest continued focus on diversification, technology advancement, and global expansion. The target reflects management's confidence in long-term growth opportunities across multiple industries.

Operational Excellence Amid Market Volatilities

Despite global auto production declining 1% and developed markets facing structural changes, Motherson outperformed through operational agility and geographical diversification. The globally-local strategy proved effective with majority of U.S. sales being USMCA compliant and minimal tariff exposure. However, trade uncertainties led to Rs. 2,000 crores working capital expansion through pre-buying and safety stock buildup. European operations faced challenges requiring EUR 50 million transformative measures to optimize costs and breathing with market changes.

Strong Financial Foundation for Future Growth

The company maintained exceptional financial discipline with net debt-to-EBITDA improving to historic low of 0.9x despite record investments. ROCE of 17.2% (normalized to 18%+ adjusting for working capital and new facilities) demonstrates efficient capital allocation. The strong balance sheet provides flexibility for continued M&A activity and growth investments. FY'26 CAPEX guidance of Rs. 6,000 crores (50% growth-oriented, majority toward non-automotive) reflects commitment to diversification while maintaining financial prudence.

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