Samvardhana Motherson Block Deals: Shares of Samvardhana Motherson International crashed ten per cent on March 16 after large block deals took place on the bourses. The scrip was down 10.94 per cent to trade at Rs 68.40 on the NSE in Thursday’s intra-day trade after promoter Sumitomo Wiring Systems (SWS) sold 3.4 per cent stake in the company through block deals to fund partial debt repayment.
Till 09:18 AM; around 305.61 million equity shares representing 4.5 per cent of total equity of Samvardhana Motherson had changed hands on the NSE. Meanwhile, on the BSE, around 14.73 million shares or 0.22 per cent of total equity of the company changed hands, the exchange data shows.
The floor price for the deal is fixed at Rs 69.9, which is about 9 per cent discount to Wednesday’s closing price of ₹76.25. The overall deal size will be $195 billion.
JPMorgan India Private Limited is acting as the sole broker to the block deal.
SWS sold about 230 million shares in the company in a deal that is valued at Rs 1,607 crore. The deal will reduce the company’s holding to 14.32 per cent in Samvardhana Motherson.
SWS, the promoter company held about 17.55 per cent stake in Samvardhana Motherson as of December quarter, the shareholding pattern data shows.
Post this transaction SWS’s stake in the company will stand reduced to around 14.15 per cent vs. 17.55 per cent.
What Do Analysts Say?
Moreover with intention to sell and still substantial stake balance with SWS, the stock might not perform in the near to medium term despite healthy financials and calibrated acquisitions announced by the company in the recent, ICICI Securities said in a note.
The company has a strong order book with cumulative revenue visibility of around EUR 3 billion for the next three years, said Emkay Global Financial Services.
It expects Samvardhana Motherson’s net debt to increase post-acquisition of SAS Autosystemtechnik GmbH, from Rs 8400 crore in December 2022 to Rs 9800 crore in FY24. The brokerage firm believes the company will register a healthy operating cash flow of Rs 6300 crore every year over FY23-25, to support debt reduction going ahead.
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