Why stock price of Samvardhana Motherson Int is falling ?

Why stock price of  Samvardhana Motherson Int is falling ?

Samvardhana Motherson International -SAMIL - is an auto components manufacturer. 

Below, I address the reasons behind the recent decline in SAMIL's stock price based on available information.

Reasons for Samvardhana Motherson International's Stock Price DeclineAs of August 11, 2025, 

SAMIL's stock price was reported at ₹90.70, reflecting a 0.82% daily decline and a 7.72% drop over the past week. 

The stock has experienced significant volatility, with a year-to-date (YTD) decline of 11.99% and a 28.38% drop over the past year, underperforming the broader market. 

Below are the key reasons for the stock price decline, based on recent reports and market analysis:

Technical Adjustment Due to Bonus Issue (July 18, 2025):

On July 18, 2025, SAMIL's stock price fell ~33% due to a 1:2 bonus issue, where shareholders received one additional share for every two held. 

This was a technical adjustment, not a reflection of fundamentals, as the stock price was adjusted to account for the increased number of shares, maintaining the overall investment value. 

Bonus Issue Breakdown

• Original Holding: 100 shares

• Bonus Ratio: 1 bonus share for every 2 held

• Bonus Received: \frac{100}{2} = 50 shares

• Total Post-Bonus Holding: 100 + 50 = 150 shares

The decline in Samvardhana Motherson International Ltd. (SAMIL) stock price and the decrease in promoter shareholding are distinct but potentially interconnected factors. 

The reduction in promoter shareholding could contribute to negative market sentiment, impacting the stock price, but it is not the sole or primary reason for the stock’s recent fall. 

Promoter Shareholding DecreaseAccording to available data, SAMIL’s promoter shareholding has significantly declined over recent quarters:

Q4 FY24 (Dec 2023 - Mar 2024): 

Promoter stake decreased from 64.78% to 60.36%, a 4.4% drop.

Q1 FY25 (Mar 2025 - Jun 2025): 

Promoter stake further decreased from 58.13% to 48.6%, a substantial 9.53% reduction.

i was not able to find exact reasons for the promoter shareholding reduction

The company reduced gross debt by 28% and net debt by 9% in Q3 FY25, achieving a leverage ratio of 0.9x, which suggests promoters may have sold shares to fund such initiatives or strengthen the balance sheet

Global Auto Demand Slowdown: 

Weak demand in Europe and North America, coupled with inventory build-up, led to brokerage downgrades and reduced target prices (e.g., Citi’s “Sell” rating with a ₹105 target).

External Factors: 

U.S. tariffs announced in March 2025  negatively impacted export-focused firms like SAMIL, contributing to a 3.19% drop in early April 2025

The decrease in promoter shareholding, driven by reclassification, possible fundraising for acquisitions, and profit booking, is a contributing factor to SAMIL’s stock price decline due to its impact on investor sentiment.

February 2025 Downgrades: 

Post-Q3 FY25 results (December 2024), brokerages like Nuvama (target cut to ₹166 from ₹194), Motilal Oswal (target ₹160), and HDFC Securities (target ₹144) reduced target prices due to a muted outlook for North America and Europe in FY26, driven by weak global auto demand.

Positive Factors and OutlookDiversification: 

SAMIL is expanding into non-automotive sectors like consumer electronics, aerospace, and solar module manufacturing (e.g., a ₹330 Cr JV with Salo Tech in Tamil Nadu). 

Its $88.1 billion order book (24% from EVs, $2.7 billion from non-auto) supports long-term growth.

Brokerage Optimism: 

Despite target price cuts, brokerages like Nuvama, Motilal Oswal, and JM Financial maintain "Buy" ratings, projecting a 6-13% revenue CAGR and 16-28% EPS CAGR for FY25-27, driven by acquisitions, EV transition, and premiumization.

Valuation: 

The stock’s correction to 21.3x/18x FY26/27 EPS makes it attractively valued compared to peers, suggesting potential undervaluation.

For SAMIL-related data, you can refer to 

https://www.motherson.com 

Disclaimer: 

This content is for educational and informational purposes only. It does not constitute financial, investment, or professional advice. Readers should consult a SEBI-registered financial advisor before making investment decisions. The author is not liable for any losses or decisions based on this information.