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Aided by strong performance at its overseas subsidiaries SMR and SMP, consolidated revenues for auto parts maker Motherson Sumi grew 25% year on year to Rs 8,406 crore in the March quarter, inline with expectations.
The company announced that both its subsidiaries together have received new orders worth 4 billion euros and these will be executed in the second half of the current fiscal. With these orders, the unexecuted order book of the company stands at 10 billion euros spread over the next five years.
Analysts continue to be bullish on the stock as they feel that the strong order book at the two subsidiaries as well as a revival in demand for passenger vehicles at its Indian operations will boost revenues and profitability.
The company has guided for a 25% revenue growth for FY15 and also intends to take the return on capital employed to 40% from the current 31%. For the quarter, revenue gains were led by a strong showing of SMR where sales grew 12% (in euro terms) and translation gains for both the subsidiaries. This growth came on the back of improving capacity utilization at SMR's Hungary plant. SMP's performance was, however, subpar with falling operating profit margins on a sequential basis due to high cost of parts and ramp up of new plant in Germany.
The company's adjusted net profit at Rs 232 crore, up 45% over the year ago quarter, was in line with expectations. The company has also been able to improve its debt position by reducing overall debt by Rs 500 crore to Rs 3,500 crore as against estimate of Rs 3,800 crore. Revenue growth for the India entity was, however, muted with y-o-y growth of just 1.5% largely driven by a 28.5% growth in exports.
A part of these sales were to its subsidiaries while the rest to its customer base. For FY14, the company has reported a growth of 3.3% year-on-year, which given the 4% y-o-y decline in domestic passenger vehicle production, indicates that the company continues to increase its content per car, believe analysts at Kotak Institutional Equities.
Given the muted revenue growth in the quarter, operating profit for the standalone business at Rs 295 crore was much below estimates.
Given the muted revenue growth in the quarter, operating profit for the standalone business at Rs 295 crore was much below estimates.
