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Research
Views on Motherson Sumi Systems 4QFY2014 results - Angel Broking
Posted On : 2014-06-19 11:26:08( TIMEZONE : IST )
Views of Mr. Yaresh Kothari (Research Analyst – Auto & Auto Ancillary, Angel Broking) on Motherson Sumi Systems 4QFY2014 results:
"Motherson Sumi Systems (MSS) recorded strong results for 4QFY2014 driven by robust performance of Samvardhana Motherson Reflectec (SMR) and Samvardhana Motherson Peguform (SMP). SMR and SMP continued to see improved performance with SMR posting record EBITDA margins at 10.6% (up 220bp yoy) and SMP posting a bottom-line profit of Rs. 24cr vs. a loss of Rs. 17cr in 4QFY2013. Standalone operations too remained healthy as EBITDA margins remained stable.
For 4QFY2014, consolidated revenues grew strongly by 25.9% yoy to Rs. 8,407cr, broadly in-line with our estimates of Rs. 8,376cr, on the back of the strong growth in SMR and SMP revenues. The revenues at SMR and SMP grew at a robust rate of 29.1% and 32.3% yoy respectively driven by execution of new orders coupled with the favorable currency movement. The standalone entity though posted a modest 1.5% yoy growth in the top-line due to the sluggish demand scenario in the domestic markets. At the consolidated level, while India revenues declined marginally by 1.4% yoy; overseas revenues grew by 32.2% yoy during the quarter. On the operating front, consolidated margins improved 94bp yoy to 9.5%, broadly in-line with our estimates of 9.8%, driven by improving capacity utilization levels at SMR and SMP. While, SMR margins witnessed a sharp improvement of 220bp yoy to 10.6%; standalone margins stood flat at 21.8%. SMP margins surprisingly declined 130bp qoq to 4.6% during the quarter. Nevertheless, led by a strong operating performance, adjusted consolidated bottom-line increased by a strong 43.6% yoy to Rs. 232cr.
We retain out positive view on the company as it continues to report sharp improvement in its operating performance, driven by its strategy of increasing the content per car, improvement in utilization levels at the new plants and profitability improvement measures at SMP. Our rating and target price is currently under review."
