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Motherson Sumi Systems Ltd.
Strong growth continues
„Q3FY11 beats estimate & up 42% on strong domestic sales
Motherson Q3FY11 PAT at Rs1064mn is up 42% y-o-y and is 28% higher than
our estimate. Key drivers of strong growth are (1) 62% growth in domestic sales,
and (2) 180bp expansion in EBITDA margin to 11.6%. Strong Q3FY11 was
despite sustained margin erosion in the global mirror unit. We have raised FY11e
EPS 5% and have maintained our 20% above-consensus EPS for FY12e.
Domestic growth likely to sustain on rising market share
Motherson has yet again grown by more than twice the industry growth in
domestic market in Q3FY11. It is also quite encouraging to note that EBITDA
margin of Motherson excluding SMR, the global mirror unit increased 250bp, to
17.7%. We expect Motherson to continue to grow at twice the domestic car
volume growth rate in FY12/13e as it has much higher content in most of the new
cars being launched.
Expansion cost hit global mirror unit, reversal from Q1FY12
Q3FY11 EBITDA of SMR, the global mirror unit of Motherson came in 19% below
estimate again as EBITDA margin in Q3FY11 declined to 6% compared to 6.7%
in Q2FY11, and 6.5% in Q3FY10. Key reason for margin decline is rise in
overhead cost ahead of commencement new manufacturing facility in Hungary.
We expect EBITDA margin of SMR to rise to 8.7% in FY12e and 9.6% in FY13e
along increase capacity utilization of new units and rise in outsourcing to India.
Valuation attractive given the strong growth prospect
Motherson is trading at PE of 12.7x FY12e and we expect it to rerate to 15x
FY12e along with strong earnings growth. The company’s diversified product
range and new product plans likely to help overcome slower industry growth.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Motherson Sumi Systems Ltd.
Strong growth continues
„Q3FY11 beats estimate & up 42% on strong domestic sales
Motherson Q3FY11 PAT at Rs1064mn is up 42% y-o-y and is 28% higher than
our estimate. Key drivers of strong growth are (1) 62% growth in domestic sales,
and (2) 180bp expansion in EBITDA margin to 11.6%. Strong Q3FY11 was
despite sustained margin erosion in the global mirror unit. We have raised FY11e
EPS 5% and have maintained our 20% above-consensus EPS for FY12e.
Domestic growth likely to sustain on rising market share
Motherson has yet again grown by more than twice the industry growth in
domestic market in Q3FY11. It is also quite encouraging to note that EBITDA
margin of Motherson excluding SMR, the global mirror unit increased 250bp, to
17.7%. We expect Motherson to continue to grow at twice the domestic car
volume growth rate in FY12/13e as it has much higher content in most of the new
cars being launched.
Expansion cost hit global mirror unit, reversal from Q1FY12
Q3FY11 EBITDA of SMR, the global mirror unit of Motherson came in 19% below
estimate again as EBITDA margin in Q3FY11 declined to 6% compared to 6.7%
in Q2FY11, and 6.5% in Q3FY10. Key reason for margin decline is rise in
overhead cost ahead of commencement new manufacturing facility in Hungary.
We expect EBITDA margin of SMR to rise to 8.7% in FY12e and 9.6% in FY13e
along increase capacity utilization of new units and rise in outsourcing to India.
Valuation attractive given the strong growth prospect
Motherson is trading at PE of 12.7x FY12e and we expect it to rerate to 15x
FY12e along with strong earnings growth. The company’s diversified product
range and new product plans likely to help overcome slower industry growth.
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