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India Equity Research Reports, IPO and Stock News
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MOTHERSON SUMI: Key takeaways
All set to achieve its goal of $ 5bn turnover by FY2015: Company seemed fairly confident
of achieving its goal of $ 5 bn turnover by FY2015. Company plans to achieve this goal
through 1) increasing content per car (currently at ~3.1%) in the domestic as well as
export markets, 2) addition of 800 million Euro order from European OEMs for SMR, 3)
addition of new products like plastic mouldings, wiring harnesses in the SMR portfolio
and 4) possibility of a new acquisition which is in line with company’s existing strategy
and helps the company add new products in its portfolio.
Raw material costs are mostly pass through: Company indicated that they have pass
through clauses with their customers on raw materials, but sometimes OEMs can delay
the price hikes by a quarter which could lead to a dip in EBITDA margins in the short term.
Although company is facing pressure due to rising copper and oil prices but given the
demand is very strong for the company they are able to offset raw material cost pressures
through operating leverage benefits.
Entry of newer models in Indian market bodes well for the company: Company’s
3QFY2011 results were partly buoyed by addition of new content from Toyota Etios
where they achieved payments for the investment made by them for Toyota Etios in
previous quarters. Company also indicated that they have a higher content/car on the
new products like Toyota Etios, Nissan Micra, Ford Figo etc which is aiding the company
to achieve much higher revenue growth than the passenger car industry.
Focus on improving profitability of SMR: Company is very focused to improve the
profitability of SMR which is vital for them to achieve their target of 40% ROCE by
FY2015. Key steps outlined by the company in this regard: 1) improving plant utilization
by adding additional products to SMR portfolio (like wiring harness, plastic components
etc), 2) addition of 800 million Euro order which is likely to contribute from FY2012
onwards and 3) improving productivity of the plants. Company is also currently investing
in the new plants for new orders which has depressed SMR’s profitability but once the
orders start contributing to the revenues we should see SMR’s profitability improving.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
MOTHERSON SUMI: Key takeaways
All set to achieve its goal of $ 5bn turnover by FY2015: Company seemed fairly confident
of achieving its goal of $ 5 bn turnover by FY2015. Company plans to achieve this goal
through 1) increasing content per car (currently at ~3.1%) in the domestic as well as
export markets, 2) addition of 800 million Euro order from European OEMs for SMR, 3)
addition of new products like plastic mouldings, wiring harnesses in the SMR portfolio
and 4) possibility of a new acquisition which is in line with company’s existing strategy
and helps the company add new products in its portfolio.
Raw material costs are mostly pass through: Company indicated that they have pass
through clauses with their customers on raw materials, but sometimes OEMs can delay
the price hikes by a quarter which could lead to a dip in EBITDA margins in the short term.
Although company is facing pressure due to rising copper and oil prices but given the
demand is very strong for the company they are able to offset raw material cost pressures
through operating leverage benefits.
Entry of newer models in Indian market bodes well for the company: Company’s
3QFY2011 results were partly buoyed by addition of new content from Toyota Etios
where they achieved payments for the investment made by them for Toyota Etios in
previous quarters. Company also indicated that they have a higher content/car on the
new products like Toyota Etios, Nissan Micra, Ford Figo etc which is aiding the company
to achieve much higher revenue growth than the passenger car industry.
Focus on improving profitability of SMR: Company is very focused to improve the
profitability of SMR which is vital for them to achieve their target of 40% ROCE by
FY2015. Key steps outlined by the company in this regard: 1) improving plant utilization
by adding additional products to SMR portfolio (like wiring harness, plastic components
etc), 2) addition of 800 million Euro order which is likely to contribute from FY2012
onwards and 3) improving productivity of the plants. Company is also currently investing
in the new plants for new orders which has depressed SMR’s profitability but once the
orders start contributing to the revenues we should see SMR’s profitability improving.
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