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O n e - o f f n e g a t i v e s s u r p r i s e , f u t u r e o u t l o o k i n t a c t
Motherson Sumi (MSL) reported its Q1FY12 results, which were below
our estimates. The topline growth was fuelled through strong standalone
growth. The topline grew to | 2271.3 crore (I-direct estimate: | 2310
crore), up 22.0% YoY. On a subsidiary level, Samvardhana Motherson
Reflectec (SMR) continued its strong business growth with sales growth
of ~20% YoY at ~| 1293 crore. On the EBITDA margins front, MSL
witnessed a sharp fall of ~300 bps QoQ. This was primarily due to onetime start up costs (~$ 85 million) incurred in new facilities mainly
catering to the €800 million orders placed by BMW. On the RM front,
overall costs rose 80 bps QoQ even as copper prices softened (down
~5%). MSL has initiated the process of acquisition of Peguform Gmbh. It
would complete the deal by Q2FY12E. On the PAT level, the profit came
in below estimates at | 65.3 crore (I-direct estimate: | 100.4 crore) also
owing to higher tax rates in the subsidiaries.
Highlights of the quarter
MSL posted a topline growth on standalone sales at | 741.3 crore (~37%
YoY growth) ahead of expectations as rising content per car (~3.0%) led
to this rise even as PV sales witnessed tepid growth. SMR also had strong
sales growth at ~20% YoY as higher orders from global majors came
through. However, on the dampening side, margins were hit as expenses
of ~$85 million related to three specific plants in Hungary, Brazil and
South Africa were mainly booked in Q1FY12. These plants, as per MSL’s
history, seem to be the largest in the sense of capacities and are expected
to cater towards the €800 million orders placed by BMW in the coming
years. The ramp up of these facilities would be witnessed completely by
Q3FY12E. Hence, it would remain a margin dampener in FY12E.
V a l u a t i o n
MSL is a leading automotive modules and component supplier and has
been improving its content per car. At the CMP of | 233, the stock is
trading at 21.2x FY12E and 15.7x FY13E consolidated EPS. Using SOTP,
the stake in SMR is valued at | 63/share (0.9x price/sales) while the
remaining business is valued at | 160/share (16x FY13E EPS). We have
arrived at a target price of | 223. We continue to maintain our HOLD
rating on the stock
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
O n e - o f f n e g a t i v e s s u r p r i s e , f u t u r e o u t l o o k i n t a c t
Motherson Sumi (MSL) reported its Q1FY12 results, which were below
our estimates. The topline growth was fuelled through strong standalone
growth. The topline grew to | 2271.3 crore (I-direct estimate: | 2310
crore), up 22.0% YoY. On a subsidiary level, Samvardhana Motherson
Reflectec (SMR) continued its strong business growth with sales growth
of ~20% YoY at ~| 1293 crore. On the EBITDA margins front, MSL
witnessed a sharp fall of ~300 bps QoQ. This was primarily due to onetime start up costs (~$ 85 million) incurred in new facilities mainly
catering to the €800 million orders placed by BMW. On the RM front,
overall costs rose 80 bps QoQ even as copper prices softened (down
~5%). MSL has initiated the process of acquisition of Peguform Gmbh. It
would complete the deal by Q2FY12E. On the PAT level, the profit came
in below estimates at | 65.3 crore (I-direct estimate: | 100.4 crore) also
owing to higher tax rates in the subsidiaries.
Highlights of the quarter
MSL posted a topline growth on standalone sales at | 741.3 crore (~37%
YoY growth) ahead of expectations as rising content per car (~3.0%) led
to this rise even as PV sales witnessed tepid growth. SMR also had strong
sales growth at ~20% YoY as higher orders from global majors came
through. However, on the dampening side, margins were hit as expenses
of ~$85 million related to three specific plants in Hungary, Brazil and
South Africa were mainly booked in Q1FY12. These plants, as per MSL’s
history, seem to be the largest in the sense of capacities and are expected
to cater towards the €800 million orders placed by BMW in the coming
years. The ramp up of these facilities would be witnessed completely by
Q3FY12E. Hence, it would remain a margin dampener in FY12E.
V a l u a t i o n
MSL is a leading automotive modules and component supplier and has
been improving its content per car. At the CMP of | 233, the stock is
trading at 21.2x FY12E and 15.7x FY13E consolidated EPS. Using SOTP,
the stake in SMR is valued at | 63/share (0.9x price/sales) while the
remaining business is valued at | 160/share (16x FY13E EPS). We have
arrived at a target price of | 223. We continue to maintain our HOLD
rating on the stock
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