Samvardhana Motherson International Limited (SAMIL), a global auto component manufacturer, has unveiled ambitious plans to reach $108 billion in revenue by 2030, marking a significant expansion beyond its traditional automotive roots. The company, celebrating its 50th anniversary, has transformed from a pure-play auto component manufacturer to a design, engineering, manufacturing, and assembly (DEMA) specialist.

Diversification and Growth

SAMIL has made substantial strides in diversifying its portfolio:

• Aerospace: From zero presence five years ago to a $250 million business with over $1 billion in order books.
• Consumer Electronics: Constructing a massive facility in Chennai, equivalent to 33 football fields, to manufacture components for a major global brand.
• Energy: Developing a new vertical focused on renewable energy solutions for the group's operations.

Financial Performance and Acquisitions

Despite global challenges, SAMIL has shown robust growth:

• Revenue grew 2.5 times in the last five years
• EBIT increased 3 times
• PAT (Profit After Tax) grew almost 5 times
• Return on Capital Employed (ROCE) doubled from 10.00% to 18.50%

The company completed 23 acquisitions in the past five years, expanding its global footprint and technological capabilities.

Technological Advancements

SAMIL is investing heavily in technology and innovation:

• Developing camera monitoring systems for vehicles
• Expanding capabilities in AI and automation
• Building an in-house IT team of 3,000 engineers to support global operations

Sustainability Focus

The company has set ambitious sustainability targets:

• Aiming to reduce emissions by 50% by 2030
• Planning to achieve carbon net-zero by 2040
• Increasing renewable energy usage by 24% in recent years

Future Outlook

SAMIL's Vision 2030 includes:

• Maintaining a 40% ROCE target for the group
• Continuing its diversification strategy with no country, customer, or component exceeding 10% of revenues
• Exploring opportunities to assemble complete vehicles for OEMs

Laksh Vaaman Sehgal, Vice Chairman of SAMIL, emphasized the company's transformation: "Motherson has successfully transformed from being a pure play auto component company to being a design, engineering, manufacturing, and assembly specialist."

As SAMIL embarks on this ambitious journey, it remains committed to its founding principles while adapting to new industries and technologies, positioning itself as a globally preferred sustainable solution provider across multiple sectors.

Samvardhana Motherson International , a leading auto components manufacturer, has announced its ambitious Vision 2030 plan, setting a target of $108 billion in gross revenue by FY30. This bold strategy represents a significant leap from the company's projected FY25 revenue of $25.70 billion, implying a compound annual growth rate (CAGR) of 33% over the five-year period.

Key Highlights of Vision 2030

• Revenue Target: $108 billion by FY30, up from $25.70 billion in FY25
• Growth Strategy: 75% of incremental revenue to come from acquisitions
• ROCE Goal: 40% consolidated Return on Capital Employed (ROCE) by FY30, compared to 18% in FY25
• Diversification: Expansion beyond automotive into non-auto segments
• Dividend Policy: Plans to maintain dividend payout ratio up to 40%

Diversification and Expansion Plans

Samvardhana Motherson is looking to significantly expand its presence beyond the automotive sector. The company plans to venture into several non-auto segments, including:

• Aerospace
• Consumer electronics
• Logistics
• Health & medical
• IT

This diversification strategy is already underway, with non-auto revenues contributing Rs 5,800 crore, or 5% of total revenues, in FY25. The company aims to progress from integrated assemblies to full vehicle assembly by 2030, showcasing its ambition to move up the value chain in the automotive sector.

Acquisition-Led Growth

A key pillar of Samvardhana Motherson's growth strategy is acquisitions. The company plans to achieve 75% of its incremental revenue through strategic acquisitions, indicating a highly aggressive inorganic growth approach.

Financial Targets and Shareholder Returns

The Vision 2030 plan sets an ambitious target for Return on Capital Employed (ROCE) at 40% by FY30, a significant increase from the 18% projected for FY25. This target underscores the company's focus on improving operational efficiency and profitability.

In terms of shareholder returns, Samvardhana Motherson plans to maintain its dividend payout ratio at up to 40%, signaling its commitment to rewarding shareholders as it pursues its growth objectives.

Market Reaction and Analyst Opinions

The announcement of Vision 2030 was well-received by the market, with the stock jumping over 4% intraday. At the time of reporting, the stock was trading 3.92% higher at Rs 98.31.

Brokerages have maintained a positive outlook on the company:

• Jefferies: Maintains a 'Buy' rating with a target price of Rs 110
• Investec: Holds its target price at Rs 95

Challenges and Past Performance

While the Vision 2030 plan is ambitious, it's worth noting that Samvardhana Motherson missed targets across various metrics in its previous 2020-2025 five-year plan cycle. This history suggests that investors and analysts may approach the new targets with cautious optimism.

The company's ability to execute its acquisition strategy, successfully diversify into non-auto segments, and improve its ROCE will be crucial factors in achieving its Vision 2030 goals. As the company embarks on this ambitious journey, stakeholders will be keenly watching its progress and ability to overcome past challenges in meeting long-term targets.