Shares of Samvardhana Motherson International Ltd. plummeted by 4% after reaching a day’s high of Rs 188.10 on 11th September, following a downward revision of BMW Group’s 2024 guidance.

BMW contributes about 5% to Samvardhana’s revenue, leading to a negative market reaction.

BMW Group’s guidance revision is due to challenges in the Automotive Segment, including delivery stops and technical issues with the Integrated Braking System (IBS) provided by a supplier.

Additionally, weak consumer demand in China is impacting sales volumes, despite government stimulus measures. BMW Group expects a significant decrease in earnings before tax.

BMW Group expects a slight decrease in deliveries compared to the previous year. Its EBIT margin is projected to fall to 6-7% from the earlier 8-10% range. The return on capital employed (RoCE) is anticipated to be 11-13%, down from the previous 15-20% range.

Samvardhana Motherson is reportedly planning to raise $1 billion through a Qualified Institutional Placement (QIP), with potential uses including acquisition or reducing existing debt.
Samvardhana Motherson has appointed bankers for a likely QIP, with the roadshow expected to start soon.

The company aims to reduce its debt to 1x EBITDA from the current 1.5x.

As of the first quarter, gross debt was Rs 20,114 crore and net debt was Rs 13,370 crore. Gross debt rose by 16% and net debt by 29% sequentially in the June quarter.

At 12:23 PM, the shares of Samvardhana Motherson were trading 2.72% lower at Rs 184.44 on NSE.

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