The brokerage initiated coverage with a “buy” rating and a price target of ₹6,150. The target implies an upside potential of 37% from current levels, as per Motilal Oswal’s base case.
Motilal Oswal wrote in its note that SPR Auto Technologies is evolving from being a traditional piston manufacturer into a diversified, technology-driven, powertrain-agnostic mobility platform through strategic acquisitions.
SPR’s pistons business is now a strong cash-cow franchise, supported by market leadership, nearly 500 basis points higher margins than the next peer, and its core Return on Capital Employed (RoCE) of 50%, Motilal Oswal wrote in its note, adding that the company is benefitting from rising multi-fuel opportunities, strong aftermarket demand, and the premature exit of global competitors from the ICE ecosystem.
“Leveraging its strong balance sheet and cashflow profile, SPR is reinvesting in acquisitions such as Antolin, Takahata, TGPEL and EMFi, thereby diversifying beyond powertrain-focused products to precision plastic molding components and expanded estimated content per vehicle by 6x to over ₹30,000,” according to the Motilal Oswal note.
Using this strategy, SPR is creating a scalable auto component platform, with a balanced exposure across the powertrains.
The brokerage now expects SPR’s Profit After Tax (PAT) to grow at a Compounded Annual Growth Rate (CAGR) of 21% over the next few years led by a stable standalone business and a rapid scale-up of its subsidiaries.
SPR’s balance sheet is expected to improve gradually from the FY26 base, supported by strong margin expansion in subsidiaries and limited growth capex requirements, the brokerage said, projecting the company’s consolidated core RoCE to improve to 28% in financial year 2029 from 20% in the year gone by.
The recent ₹1,000 crore fund raise which SPR recently completed to fund future organic and inorganic growth opportunities, could act as a key trigger for further upside, the Motilal Oswal note said.
Rise in competitive intensity, fluctuations in commodity prices, changes in technology and loss of key customers are some key risks for SPR, as highlighted by Motilal Oswal.
The Motilal Oswal Bull Case
The bull case scenario from Motilal Oswal assumes a 24.4% revenue CAGR over financial year 2026-2029, versus 20.7% in its base case for SPR Auto Tech. The stronger revenue growth will be driven by faster than expected growth in the new business.
Motilal Oswal’s bull case also expects EBITDA margin to improve to 19.2% by financial year 2029, 30 basis points higher than their base case.
The bull case price target of ₹8,085 implies an upside potential of nearly 80% from current levels.
Shares of SPR Auto Technologies are trading 3.8% higher on Thursday at ₹4,659. The stock has gained 48% so far this year. All three analysts covering the stock have a “buy” rating on it.