homebusiness Newscompanies NewsSamvardhana Motherson shares plunge 10% after equity worth Rs 1,700 crore change hands
Samvardhana Motherson shares plunge 10% after equity worth Rs 1,700 crore change hands
ICICI Securities, which too have a buy rating on the stock with a target of Rs 110 per share, says Samvardhana Motherson is targeting to treble its revenue to $36 billion in the next 3-4 years through a mix of organic and inorganic growth, with 25 percent of the revenue mix aimed to come from the non-auto segment (currently it is sub-3 percent).
CNBC-TV18 Newsbreak on Samvardhana Motherson Promoter Sumitomo Wiring Systems selling 3.4 percent stake in the company via block deals today, is confirmed. As per the information disclosed to exchanges, Sumitomo Wiring Systems has sold 3.4 percent stake through ‘bulk deal’ as part of global deleveraging strategy to fund partial debt prepayment of SWS group in the rising interest environment.
Sumitomo Wiring Systems along with HK Wiring held 17.72 percent stake in Samvardhana Motherson and 25.34 percent stake in Motherson Sumi Wiring. With today’s block deals, the holding of Sumitomo Wiring Systems in Samvardhana Motherson will reduce to 14.32 percent while its shareholding in Motherson Sumi Wiring will remain unchanged.
Sumitomo Wiring Systems likely to sell 3.4% stake in the Samvardhana Motherson via block deal; sources to @VivekIyer72 pic.twitter.com/ZuJoYP0PTP
— CNBC-TV18 (@CNBCTV18Live) March 15, 2023
Sumitomo Wiring Systems will continue its long-standing agreement with Motherson Wiring as a principal joint venture partner and will keep supporting the company on evolving technologies and technical know-how, says Samvardhana Motherson.
Sumitomo Wiring Systems was first JV partner of Motherson and its promoter of Samvardhana Motherson since its IPO in 1993. This is a first dilution of Sumitomo Wiring Systems in almost four decades. “Sumitomo Wiring Systems firmly believes that Samvardhana Motherson continues to be an aspiring entity with a robust global growth potential ahead. Accordingly, Sumitomo Wiring Systems will remain a promoter.”
Samvardhana Motherson stock has slipped more than 10 percent following the block deals of 4 percent equity worth Rs 1,700 crore in the first hour of trade in Thursday’s session. The other group company, Motherson Wiring is flat around the level of Rs 48 per share.
CNBC-TV18 has accessed the term sheet of the block deal, in which the floor price was fixed at Rs 69.90 per share, which is almost a nine percent discount to the current market price. As per the term sheet, no intention to sell for 180 days from the seller has been committed by Sumitomo Wiring.
JPMorgan India Private Limited is acting as the sole broker to the block deal. This deal is another one in the long list of FDI outflows that secondary market has witnessed in February and March 2023.
Most brokerages though remain positive on the stock with target on the stock falling in the range of Rs 80-120 per share.
The brokerage firm, Motilal Oswal while recommending a buy call on the stock, has said the company is well-placed to benefit from easing supply issues. Moreover, the company is a big beneficiary of global mega trends emerging in the automotive industry.
Motilal Oswal pointed out that Samvardhana Motherson has weathered a storm over the last two-to-three years and now trades at a reasonable valuation. The brokerage firm expected good growth across the company’s businesses despite commodity cost deflation.
ICICI Securities, which too have a buy rating on the stock with a target of Rs 110 per share, says Samvardhana Motherson is targeting to treble its revenue to $36 billion in the next 3-4 years through a mix of organic and inorganic growth, with 25 percent of the revenue mix aimed to come from the non-auto segment (currently it is sub-3 percent).
The select brokerage firms like Morgan Stanley and Citi have underweight and sell call on the stock.
First Published: Mar 16, 2023 8:38 AM IST
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