Samvardhana Motherson International Ltd has recently raised capital through the qualified institutional placement (QIP) route, and the company’s Chief Financial Officer, Kunal Malani, has shared insights into how they plan to leverage this funding for future growth. On September 20, the firm announced that it successfully secured ₹6,438 crore via the QIP process, which garnered substantial interest from both domestic and international institutional investors.
In an interview with NDTV Profit, Malani elaborated on the company’s strategic growth initiatives following this fundraising effort, stating that the primary goal of the capital raise was to “strengthen the balance sheet.” He emphasized that the company is well-positioned to pursue multiple growth opportunities simultaneously.
The immediate allocation of the funds will focus on settling outstanding debts, but in the long run, these resources will empower the company to capitalize on new growth avenues. Malani expressed optimism about the anticipated opportunities that will arise, stating that the company plans to “leverage” these prospects to expand its business landscape. He also addressed the company’s targeted net debt-to-EBITDA ratio, indicating a commitment to maintaining this figure below 2.
He pointed out that Samvardhana Motherson has historically adhered to this discipline, never surpassing a 1.5 ratio despite being an active acquirer, having completed over 30 acquisitions in the past decade. In discussing potential challenges, Malani addressed the recent announcement from BMW regarding its reduced guidance for the fiscal year 2025. He reassured stakeholders that Samvardhana Motherson is unlikely to be significantly affected by this adjustment.
As of the fourth quarter of the 2023–24 financial year, BMW accounted for only about 5% of the company’s revenue. Malani explained that while a 10–15% reduction in revenue from BMW could be anticipated, the company has a diversified revenue model. He highlighted the strength of their 3CX system, which ensures that no single country, component, or customer constitutes more than 10% of their sales, effectively mitigating risks associated with reliance on any single revenue stream.
Malani also noted BMW’s recent reduction in its EBIT margin forecast for the current year, lowering it from a range of 8%–10% to between 6% and 7%. This adjustment, while notable, is not expected to have a significant detrimental impact on Samvardhana Motherson, thanks to its well-structured revenue diversification strategy and robust financial management practices.
Samvardhana Motherson International Ltd is a leading automotive component manufacturer based in India, specializing in providing innovative solutions for global automotive customers. With a strong presence in over 40 countries, the company focuses on diverse product offerings, including wiring harnesses, rearview mirrors, and plastics. Its commitment to quality, sustainability, and strategic acquisitions drives its continued growth in the industry.
