Samvardhana stock rises 10%, could gain up to 33% more

economictimes.indiatimes.com:

Japanese Yachiyo Industry, Honda Motors' four-wheeler business, got more analysts becoming optimistic about the auto ancillary giant, stoking a double-digit jump in the company's stock price on Wednesday. Japanese brokerage firm Nomura upgraded the stock by two notches to 'buy' and set a target price that has the potential to deliver another 17% returns from the current levels.

«Believe this is a good acquisition,» said Nomura in a note to clients. «See high potential of sunroof systems and entry into Japanese customers.

Further upside can come from ability to add customers across Japan, US & EU.» Shares of Samvardhana Motherson surged as much as 10% to top ₹93.65 apiece on the NSE, before settling at ₹90.35, up 6.11% from the previous close.JM Financial is the most bullish on the stock and expects to deliver 33% returns from the current levels. «We see this deal as a strategic positive for SAMIL's long-term growth, as we believe it helps the company penetrate deeper with Honda (cross-selling) and help foray into global sunroof and fuel tank markets,» the firm said.

The domestic brokerage said easing supply chain, sustained recovery in global auto sales, higher operating leverage and improving profitability are expected to drive RoCE going ahead, while the acquisition of Yachiyo, Honda Motors’ subsidiary, comes at an attractive valuation 1.7 times trailing EV/Ebitda and 0.2 times EV/sales. More than 60 million shares exchanged hands on the BSE and NSE, up over six times its combined daily average volume for the last month.