Strong order book, improving cash flows positive for Motherson Sumi

Further margin gains could be a key trigger for the stock

The stock of India’s largest auto component maker shed 7 per cent on Thursday after brokerages downgraded it on higher valuations. A strong March quarter performance had seen the Motherson Sumi scrip jump about 13 per cent on Wednesday but the rally fizzled out.

Despite the stock volatility, the fundamentals have seen an improvement with gains including a robust order book, potential for margin gains, improvement in cash flows and debt reduction. Given its products in multiple segments and key supplier status, the company could be a prime beneficiary as demand recovery takes hold.

The company’s order book of 15.6