Samvardhana Motherson sees growth across commercial vehicles, aerospace and electronics

Question

You have reported the highest-ever quarterly revenue and healthy growth across businesses, even as many global original equipment manufacturers (OEMs) have cut their growth guidance. What has kept you going, and what are you hearing from your key clients?

Answer:

We definitely had a very strong July-September quarter of 2026 (Q2FY27), and it's the result of many years of building a resilient base, which is built on 3CX10, diversifying our businesses into many different verticals, adding more components, more geographies and different sets of businesses. So, if some areas see weakness, something else makes us stronger. This quarter, we grew by 27%, reported all-time high revenues in the first half of the year, and our normalised PAT also grew by about 37%. While the overall light vehicle industry saw a slight decline, led by China, South Asia supported volumes. India specifically has been very strong. For us, the commercial vehicle market bounced back, especially on the North American side, where it grew very strongly. Commodity prices have been on the rise, so we see an impact in terms of our revenue, but also a drag on our margins. Those pressures remain. This is also a mix of emerging markets and the consolidation of two new acquisitions which we had announced. On an annualised basis, Yutaka Giken and Auto Electric will add about $2 billion to the topline. We have consolidated them in this quarter — three months for Auto Electric and two months for Yutaka Giken.

Question

How do you see business panning out for the second half of the year, and what does it mean in terms of the year-end target on revenues? The emerging businesses and the wiring harness business have grown at a good clip. How do you see the business mix evolving?

Answer:

We do not have a very short-term guidance. As you know, we have a five-year vision, and we are all moving towards that. These are all stepping stones in that direction. Our current businesses remain strong, and we continue to work very hard to improve our efficiencies. All the teams around the world have been working, so you see good performance all across. Even in areas where growth has been less, they have still performed well. In modules and polymer products, for example, we have restructured ourselves. We are always resilient with the market, and we do see growth in the commercial vehicle market continuing in the coming quarters. We see the India growth story as very strong, and our emerging businesses are getting added to with the new acquisitions. On the aerospace side, we have very strong demand. We also have consumer electronics. All these are areas where customer demand is pretty good, and we are in the early stages where we are growing very fast.

Question

What are your thoughts on raw material prices? Copper prices have increased and a lot of other input costs have also risen. What exactly is your margin lever going forward? Are all the cost increases pass-throughs, and what can drive margins from the high single digits that we are seeing?

Answer:

We are not guiding in terms of margins. We have always focused on return on capital employed because we have diverse businesses. Many of our businesses are integrated assemblies and have a lot of customer-nominated parts. Inflation in commodities like copper is a pass-through, but there is a lag, and that also impacts our results to an extent. If we look at copper, which is mainly used in our wiring harness business, we see an impact of more than 1% on our EBITDA margins. On a numerator-denominator basis, if we add it, it will be even more, around 1-1.5% plus. That is an impact which we all face. There are certain inflationary pressures which cannot be passed through immediately and are a matter of discussion with customers. At the end of the day, we work in this industry as partners, so we figure out together what can be passed through, what can be offset and how we progress in the future together. That's the nature of this industry, where we find ways and means in which all of us can coexist in a profitable manner.

Question

Are you still looking at some inorganic growth? You haven't shied away from it. If it's the right fit and the right price, you have gone ahead and bought a couple of assets. Is there something more in the offing in the second half of the year?

Answer:

We do not know exactly when or what will happen, but in terms of our readiness, we are ready. We have a clear vision and a lot of requirements coming from customers. We have a very strong balance sheet, despite acquisitions and despite the growth. Our leverage ratio is 0.8 times EBITDA, so this is a very good position for us. We continue to be in a strong position where we can invest for our customers. We are investing in 17 sites on an organic basis, and we are ready for inorganic growth as well.