Samvardhana Motherson acquires Nexans Autoelectric for ₹2,171 Cr; How will it benefit the company?

Synopsis: For what reason did Samvardhana Motherson pump Rs 2,171 crore into Nexans Autoelectric? The transaction might revamp its wiring harness business, strengthen its relationship with premium OEMs, and open up the following stage of its growth.

Samvardhana Motherson has a good history of acquiring the right businesses at the right time. With Rs 2,171 crore on Nexans Autoelectric, the auto components major is now making one of its most intriguing moves. Is this simply another expansion move or a strategic step that could transform its wiring harness business and become a new growth story?

With a market capitalisation of Rs 1,26,970 crore, the shares of Samvardhana Motherson International Ltd are currently trading at Rs 120.70 per share, down 0.3 percent from its previous day’s close of Rs 121.05 per share. Over the past five years, the stock has delivered a return of 76 percent, underperforming NIFTY 50’s positive return of 90 percent.

About the Acquisition

A few days ago, Samvardhana Motherson International Ltd announced that it is acquiring a 100 percent stake in Nexans Autoelectric’s wiring harness business, a big move as it keeps growing in the global auto parts market. The company is using its fully owned arm, Motherson Global Investments B.V., to take over 100 percent of both Nexans Autoelectric GmbH and Elektrokontakt GmbH. It is expected that this transaction will close by Q1 FY27.

If you’re wondering, wiring harnesses are basically bundles of wires that run all through a car, carrying power and signals wherever they’re needed. By taking over this business, Motherson wants a bigger role in this crucial part of making cars, and it’s hoping to offer more to carmakers around the world.

The whole deal’s worth 207 million euros (Rs 2,170 crore), not counting any cash or debt. They’ll adjust the final price when the deal closes, depending on how much cash, debt, and working capital the business has at that point. So, the amount paid might shift a bit before everything’s signed.

The acquisition isn’t happening all at once, instead it’s getting done through a set of agreements, meaning they’ll transfer different bits and pieces of the Autoelectric business in stages. Right now, Motherson’s in exclusive talks with Nexans, so nobody else is in the running for this deal.

About Nexans Autoelectric

Nexans Autoelectric has been making wiring harnesses for cars for more than sixty years. In CY 2024, the company brought in about Rs 7,865 crore in revenue, with an EBITDA of Rs  503 crore, resulting in an EBITDA margin close to 6.4 percent.

Almost 81 percent of the revenue comes from passenger vehicles. The rest, 19 percent, comes from commercial vehicles. Over half of Nexans Autoelectric’s revenue comes from high-end carmakers like BMW and Mercedes-Benz. Volkswagen, Audi, and Porsche follow close behind, so it’s clear the company has a solid foothold in the luxury car market.

Coming to its geographical split (CY 2024 sales), the company derives 74 percent of its revenue from Europe and North America, followed by 24 percent from the Americas and the remaining 2 percent from China. AutoElectric operates 22 facilities in 11 countries, supported by over 800 engineers and a highly skilled workforce of over 13,000 employees. Additionally, the management also cited a few advantages that the company will gain from this acquisition.

Pankaj Mital (Whole-time Director & COO) of Samvardhana Motherson sees the Nexans Autoelectric deal as a big boost for its wiring harness business. He says this move could almost double revenues in that segment down the line. They’re aiming to close the acquisition by the first quarter of FY27. Plus, bringing Nexans Autoelectric on board gives Motherson a shot at cross-selling more products to its current global customers.

Looking ahead, management feels good about the near future and expects better year-on-year results in FY26. Over the next few years, they’re pushing for double-digit growth at Nexans Autoelectric, banking on bigger scale, closer customer ties, and the extra efficiency that comes after the deal wraps up.

Brokerage Comments

Nomura calls Samvardhana Motherson’s move to buy Nexans Autoelectric a smart, strategic play. Before this, Motherson didn’t have much presence in the global passenger vehicle wiring harness market. Now, with Nexans Autoelectric’s strengths in both low- and high-voltage powertrain harnesses, body wiring, and specialised parts, Motherson can bring more to the table for the world’s big carmakers. The fit feels natural, and they get to expand their lineup and serve their customers better.

There’s also the global angle. This deal gives Motherson a bigger footprint across Europe, North America, and Asia. Nomura likes the price and expects the acquisition to boost earnings right from year one. With steady growth in sight and clear synergies, they’re sticking with their ‘Buy’ rating and a target price of Rs 127 (5 percent upside).

On the other hand, Motilal Oswal cited that this is Motherson’s first big step into passenger vehicle wiring harnesses since the demerger. They see it opening up fresh, long-term growth, fitting neatly with Motherson’s 3CX10 strategy, and helping the company spread its bets across different products and customers. Because Nexans Autoelectric’s products and clients line up so well with Motherson’s, integration should go smoothly, and real synergies are likely.

Looking ahead, Motilal Oswal expects Motherson to outpace global auto sales trends. Factors like the push for premium vehicles, the shift to EVs, a hefty order book, and a strong track record with past acquisitions all build confidence. Sure, there are short-term bumps like tariffs in some regions that might sting, but Motherson’s local manufacturing gives it some protection. Motilal Oswal is holding firm on its ‘Buy’ rating with a target price of Rs 129 (7 percent upside).

So, coming to our question, what will the company gain out of it? 

So, Samvardhana Motherson’s acquisition of Nexans Autoelectric really expands their wiring harness business and gives them better access to top global carmakers and developed markets. With Nexans Autoelectric on board, they get more geographic reach and a bigger slice of the market for advanced wiring solutions.

This deal opens up chances for the company to work more closely with its customers and sell a wider range of products, which helps keep growth on track, with significant revenue coming instantly after the acquisition. Still, the real payoff depends on how well they manage the integration and keep those customer relationships strong after the acquisition.

Samvardhana Motherson International Limited (SAMIL) is a global design, engineering, manufacturing, and assembly specialist. The company, formerly known as Motherson Sumi Systems Limited, was established in 1986 as a joint venture between Motherson and Sumitomo Wiring Systems, and was listed on the BSE and NSE in India in 1993. 

The company is focused, dynamic, and progressive, providing customers with innovative and value-added products, services, and solutions. With a diverse global customer base that includes nearly all leading automobile manufacturers worldwide, the company supports its customers from over 425 facilities across 44 countries on five continents.

The company has diversified to support customers in non-automotive businesses, including technology and industrial solutions, health & medical, aerospace, and logistics. SAMIL is currently the largest auto ancillary in India and is ranked among the top 15 automotive suppliers worldwide.

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