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F o r e x p r o v i s i o n s h i t p r o f i t a b i l i t y …
Motherson Sumi (MSL) reported its Q2FY12 results, which were below
our estimates. The consolidated topline came in line with our estimates at
| 2290.3 crore (I-direct estimate: | 2284.3 crore) reflecting a 19.5% YoY
growth. On a subsidiary level, Samvardhana Motherson Reflectec (SMR)
sustained its robust business performance with sales growth of ~22%
YoY at ~| 1265 crore. The adjusted EBITDA margin came in at 8.9%,
higher than our estimate of 8.6%, driven by an improved standalone
operational performance (up 270 bps QoQ) at 15.6%. The raw material
cost as a proportion of net sales declined ~60 bps QoQ even as copper
prices remained firm (up ~27 bps QoQ). The reported PAT (post concern)
declined 72% YoY to | 24.2 crore due to the impact of | 74.3 crore for
unrealised forex impact on loans and certain interest accrued on loans.
The adjusted PAT is, thus, at | 98.6 crore, which is above our estimate.
Highlights of the quarter
MSL posted a topline growth on standalone sales at | 774.5 crore (up
18.6% YoY) driven by rising content per car (~3.0%). SMR had strong
sales growth at ~22% YoY, which could have been bettered if not for
labour problems faced at Maruti. The consolidated EBITDA margins were
higher 64 bps sequentially at 8.9% on account of a robust operational
performance on a standalone basis. However, volatility in the rupee and
euro impacted profitability. The reported PAT (post concern) declined
72% YoY to | 24.2 crore due to total provision of | 61.4 crore for
unrealised forex loss on loans not due till FY13-14E. The profitability of
SMR was also hampered by slow ramp up in plants of Hungary and Brazil.
V a l u a t i o n
We have factored in lower capacity utilisation at new plants, slowdown in
automotive demand and accordingly pruned our estimates. However, we
believe MSL, a leading automotive modules and component supplier, is
currently trading at attractive valuations. At the CMP of | 177, the stock is
trading at 20.8x FY12E and 13.0x FY13E consolidated EPS. We have
valued the stock on an SOTP basis. The stake in SMR is valued at |
52/share while the remaining business is valued at | 143/share. We have a
BUY rating on MSL with a target price of | 196.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
F o r e x p r o v i s i o n s h i t p r o f i t a b i l i t y …
Motherson Sumi (MSL) reported its Q2FY12 results, which were below
our estimates. The consolidated topline came in line with our estimates at
| 2290.3 crore (I-direct estimate: | 2284.3 crore) reflecting a 19.5% YoY
growth. On a subsidiary level, Samvardhana Motherson Reflectec (SMR)
sustained its robust business performance with sales growth of ~22%
YoY at ~| 1265 crore. The adjusted EBITDA margin came in at 8.9%,
higher than our estimate of 8.6%, driven by an improved standalone
operational performance (up 270 bps QoQ) at 15.6%. The raw material
cost as a proportion of net sales declined ~60 bps QoQ even as copper
prices remained firm (up ~27 bps QoQ). The reported PAT (post concern)
declined 72% YoY to | 24.2 crore due to the impact of | 74.3 crore for
unrealised forex impact on loans and certain interest accrued on loans.
The adjusted PAT is, thus, at | 98.6 crore, which is above our estimate.
Highlights of the quarter
MSL posted a topline growth on standalone sales at | 774.5 crore (up
18.6% YoY) driven by rising content per car (~3.0%). SMR had strong
sales growth at ~22% YoY, which could have been bettered if not for
labour problems faced at Maruti. The consolidated EBITDA margins were
higher 64 bps sequentially at 8.9% on account of a robust operational
performance on a standalone basis. However, volatility in the rupee and
euro impacted profitability. The reported PAT (post concern) declined
72% YoY to | 24.2 crore due to total provision of | 61.4 crore for
unrealised forex loss on loans not due till FY13-14E. The profitability of
SMR was also hampered by slow ramp up in plants of Hungary and Brazil.
V a l u a t i o n
We have factored in lower capacity utilisation at new plants, slowdown in
automotive demand and accordingly pruned our estimates. However, we
believe MSL, a leading automotive modules and component supplier, is
currently trading at attractive valuations. At the CMP of | 177, the stock is
trading at 20.8x FY12E and 13.0x FY13E consolidated EPS. We have
valued the stock on an SOTP basis. The stake in SMR is valued at |
52/share while the remaining business is valued at | 143/share. We have a
BUY rating on MSL with a target price of | 196.
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