India’s largest listed auto components manufacturer by market value, Samvardhana Motherson International posted an operating performance in the July to September quarter of FY26 that surpassed market expectations, even as the global passenger vehicle industry continues to battle multiple challenges.
The company’s gains were supported by rising content per vehicle and expanding market share, prompting several brokerage firms to revise their earnings projections upward after the latest results.
Although the stock had remained largely flat over the past twelve months, it recorded a gain of nearly 6 per cent during the week following the earnings announcement.
Margins Hold Up Despite Global Headwinds
The firm reported a 7 per cent rise in consolidated operating profit, with operating margins coming in at 8 point 7 per cent, slightly below the previous year but ahead of analyst estimates.
Margin pressures stemmed from ongoing structural issues in the European Union, tariff related expenses, and initial costs linked to new greenfield facilities.
Among business segments, the wiring harness division saw a margin decline of 70 basis points to 10 point 5 per cent, affected by cyclical weakness in the US commercial vehicle market, while the emerging business segment recorded a steeper margin drop due to changes in product mix.
Brokerages Raise Estimates Supported by Growth Drivers
Nuvama Research increased its operating profit forecasts for FY26 to FY28 by up to 9 per cent, factoring in better performance in the modules and polymer divisions, stronger emerging business margins, and the integration of the Yutaka acquisition.
The brokerage remains optimistic due to strong management execution, strategic acquisitions, a sizeable order book, and rising value per vehicle.
Consolidated revenue grew 8 point 5 per cent year on year, supported by higher volumes, increased content per vehicle, and the acquisition of Atsumitec.
Adjusted net profit exceeded expectations thanks to stronger operating performance, higher other income, and lower interest costs.
Motilal Oswal Research raised its earnings projections for FY26 and FY27 by 9 per cent and 4 per cent respectively, highlighting the company’s ability to outperform global auto sales driven by premiumisation, electric vehicle adoption, a strong automotive and non automotive order book, and successful integration of acquired businesses.
Positive Outlook for the Second Half of FY26
Management remains confident about the second half of FY26, expecting improvements in revenue and margins supported by seasonal factors, upcoming model launches, and rising utilisation at new greenfield facilities.
Emkay Research believes the company’s newer verticals, especially consumer electronics, along with renewed domestic focus, will guide the next phase of expansion, though it trimmed FY26 earnings slightly due to a more gradual greenfield ramp and normalising margins in the emerging business, while keeping estimates for FY27 and FY28 unchanged.
Order Book and Valuation Overview
The company’s order book stands at 87 point 2 billion dollars as of September 2025, to be executed over the next five to six years, with electric vehicle platforms accounting for 22 per cent of the pipeline, slightly lower than before as automakers diversify between internal combustion engines, hybrids, and EVs.
JM Financial continues to maintain a buy rating while acknowledging near term margin pressure from the ramp up of newly established facilities, and has slightly cut its operating margin forecast by 20 basis points for both FY26 and FY27.
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