Motherson Sumi hits record high on good Q4 results and bonus announcement

The stock hit a record high of Rs 441, up 4%, extending its Friday's 3.5% gain on BSE.

Motherson Sumi Systems (MSSL) hit a record high of Rs 441, up 4% on the BSE, extending its Friday’s 3.5% gain, after the company reported 12% year-on-year (YoY) growth in its consolidated net profit at Rs 475 crore for the quarter ended March 2017 quarter (Q4FY17).

The company’s consolidated revenue grew 15% at Rs 11,100 crore on YoY basis. Its earnings before interest, tax, depreciation and amortization (Ebitda) margin expanded 98 basis points (bps) YoY to 11.1%, benefitted by strong operational performance at Samvardhana Motherson Reflectec (SMR) and Samvardhana Motherson Peguform (SMP) coupled with healthy standalone performance.

“This is the second year of our 5-year plan for 2020 and we are closing it on an all-time high for MSSL.  We see very exciting times ahead. SMR & SMP have seen strong customer orders, giving them a fantastic outlook. And our wiring harness division has been strengthened by recent acquisition of PKC Group. This brings great new opportunities for supporting the OEM’s around the world,” said Vivek Chaand Sehgal, MSSL’s Chairman.

Analyst at Karvy Stock Broking expects strong volume growth for MSSL over next 2-3 years. Factoring healthy performance at Samvardhana Motherson Automotive Systems Group BV (SMRPBV), strong standalone performance, well-built order book and improving margin profile.

“SMP revenue growth hitting a 6-quarter high and margins at life-high was a key positive. Further, SMRP BV revenues are expected to pick-up in FY18/19E as revenues from ~5/ 4 plants commissioned in FY16/ FY17 would ramp up. These would drive market share gains, especially in BMW and Daimler, diversifying revenues,” analysts at Elara Capital said in a result update.

Meanwhile, the board of directors of the company has recommended to issue the bonus shares in the ratio of 1 (one) bonus shares against the 2 (two) existing shares. The board also recommended a dividend of Rs 2 per equity share (face value of Re 1 each) for the financial year ended March 31, 2017 on the expanded share capital (including the proposed bonus shares).