The brokerage has set a target price of Rs 170. The downgrade follows SAMIL's acquisition of a 95% stake in Japan's Atsumitec. The remaining 5% voting rights stake will continue to be owned by Honda Motor. Currently Honda Motor owns 48.01% in Atsumitec while the founders and other shareholders hold the rest.
"Equity value for 100% stake in Atsumitec is 8.5 billion yen or $57 million," said the company in an exchange notification. The $412 million turnover Atsumitec makes high precision machined components including gear shifters, chassis and transmission parts for four and two- wheelers and has nine plants in Japan, China, United States, Mexico, Thailand, Indonesia and Vietnam.
The broker notes that this acquisition expands SAMIL's product portfolio to include chassis components like gear shifters and powertrain parts such as pulleys, connecting rods, and stator shafts. Additionally, it extends SAMIL's geographic reach to Vietnam, providing access to global metal and machining capabilities. The company anticipates increased penetration with Japanese OEMs on a global scale.
However, the brokerage has adjusted its FY2026-27 EPS estimates for SAMIL downward by 4-7% due to lower margin expectations, reflecting a general trend of declining margin outlooks among global OEMs. While the Atsumitec acquisition was completed at attractive valuations, its estimated EPS accretion is relatively modest at 1-2% based on FY2024 PAT. Given the ongoing weakness in the global automotive market, near-term growth and margins for SAMIL are expected to remain under pressure. The broker believes that the company's current valuations appear fair, considering these factors.
SAMIL is one of the world’s leading specialised automotive component manufacturing companies for OEMs. It is currently the largest auto ancillary in India and is ranked among the top 15 automotive suppliers worldwide.
On a consolidated bsis, net profit of SAMIL surged 336.49% to Rs 879.74 crore while net sales rose 18.78% to Rs 27668.35 crore in Q2 September 2024 over Q2 September 2023.