Samvardhana Motherson International Q4 FY26 earnings call

Samvardhana Motherson International Limited achieved its highest ever quarterly and annual revenues in Q4 FY26, with Q4 revenues growing 17% year-on-year and full-year revenues exceeding INR 1.25 Lakh Crores, up 11% year-on-year. This strong performance was underpinned by a diversified business model and disciplined execution, effectively navigating elevated commodity prices and geopolitical uncertainties. The company also reported a 42% year-on-year growth in Q4 EBITDA, with margins improving by 200 basis points, and normalized PAT grew 66% year-on-year in Q4.

The company's emerging businesses demonstrated significant growth. The consumer electronics segment scaled up remarkably, with revenues increasing approximately 7.5x year-on-year in FY26 and Q4 revenues growing 46% sequentially, achieving EBITDA profitability for the full year. The third facility (GF3) for consumer electronics is on track for commissioning in Q3 FY27, expected to further boost growth. Similarly, the aerospace business continued its strong momentum, with revenues growing 40% year-on-year and its order book expanding over 20% to USD 1.6 Billion, providing robust long-term visibility.

Motherson continued to deepen its relationships with global OEMs through strategic inorganic growth. The company successfully integrated Atsumitec and completed the acquisition of another Honda San asset. The acquisition of Yutaka Giken is on track for completion by the end of H1 FY27. Furthermore, the proposed acquisition of Nexon's automotive harness business, expected to close by end of June or beginning of July, will significantly enhance wiring harness capabilities and foster cross-selling opportunities across the group.

The company maintained strong financial discipline, reflected in its leverage ratio improving to an all-time low of 0.8x, well within its long-standing financial policy. FY26 capex amounted to INR 5,911 Crores, representing 49% of yearly EBITDA, primarily directed towards growth projects and new capabilities. For FY27, capex is guided at approximately INR 6,000 Crores (+/- 10%), with an equal split between growth and maintenance. A final dividend of INR 0.25 per share was approved, bringing the total FY26 dividend to INR 0.60 per share, with a payout ratio of 16.4%.

Despite a challenging operating environment marked by sharp increases in copper prices (up 16% sequentially, 38% YoY), crude-linked inflationary pressures, and geopolitical tensions, Motherson's diversified business model proved resilient. The company's long-term pass-through arrangements for raw material prices and its globally local manufacturing strategy helped mitigate disruptions. Management anticipates that planned European OEM launches in FY27 will support passenger vehicle growth, complementing the strong momentum in emerging markets like India and China.

Motherson is making steady progress towards its Vision 2030 aspiration of reaching USD 108 Billion in gross revenues and achieving 40% ROCE across businesses. The current book business value of USD 96 Billion provides strong visibility for future growth, with 22% originating from EV programs and 3% from non-automotive segments. The company's 3CX10 strategy and D.E.M.A.L. capabilities continue to strengthen its risk management and diversification across customers, geographies, and components.