Samvardhana Motherson is preparing to raise $1 billion through a qualified institutional placement (QIP), according to a CNBC-TV18 report. The QIP, which is expected to be launched soon, may be used to fund an acquisition or to reduce the company’s existing debt.
Shares of the company on Tuesday closed marginally down by 0.24 per cent at Rs 192.75 apiece on the BSE.
The company has appointed bankers to manage the QIP, with a roadshow anticipated in the near future. The objective is to reduce the debt-to-EBITDA ratio from the current 1.5x to 1x.
At the end of the first quarter of the current fiscal year, Samvardhana Motherson’s gross debt stood at Rs 20,114 crore, with net debt at Rs 13,370 crore, reflecting a sequential increase of 16% and 29%, respectively. The company has been actively exploring acquisition opportunities and recently declared a final dividend to its shareholders in August.
With a market capitalisation of Rs 1,31,256.63 crore, Samvardhana Motherson has seen significant stock performance in 2024, gaining 83.26 per cent year-to-date. Over the past two years, the stock has delivered a remarkable 131.04% return.
Investment Outlook on Samvardhana Motherson
“The stock has seen a correction in the past 5-6 days. It has shown a recovery from its 20-day moving average. Traders can buy it now for a target of Rs 200, keeping a stop loss at Rs 192,” Manas Jaiswal, research analyst, told CNBC-Aawaz.
For investors, he added, those who want to hold it for 3-6 months can continue with the stock. “Once the share crosses Rs 205-206, you will see a big rally in the stock, and it can touch Rs 245 also,” Jaiswal said.
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