Motherson Sumi (Q4 FY14)
Revenues at Rs84bn came in ahead of our estimates, wherein the growth in SMR and SMP revenues was healthier than expected
May 23, 2014 06:05 IST India Infoline News Service
CMP Rs280, Target Rs325, Upside 16.1%
Source: Company, India Infoline Research
Standalone Operations
Standalone business reported revenues at Rs12.5bn (4.6% lower than estimates) implying a growth of 1.5% yoy in a weak domestic auto market. While the domestic revenues were down by only 2.8% export revenues were strong with a 28.5% yoy jump. While the exports markets have been slow, we note that there has been steady increase in exports to SMR entity from the standalone business. Management will look for similar opportunities in the SMP business also going ahead. MSSL’s standalone business witnessed a healthy operating performance wherein the OPM (excl forex effect) was recorded at 22% better than our estimates.
Result table (Standalone)
- Revenues at Rs84bn came in ahead of our estimates, wherein the growth in SMR and SMP revenues was healthier than expected
- Reported operational performance in SMR (OPM at 10.6%; +217bps yoy) and SMP (OPM at 4.6%; +142bps yoy) indicated of both the businesses on a trajectory of margin expansion.
- Standalone operating margins were healthy at 22% and were better than our estimates.
- Driven by robust operational improvement in its various business units, consolidated operating margins for the company improved to 9.5% (+94bps yoy).
- Maintain BUY with a revised price target of Rs325
| (Rs m) | Q4 FY14 | Q4 FY13 | % yoy | Q3 FY14 | % qoq |
| Domestic | 12,721 | 12,901 | (1.4) | 11,461 | 11.0 |
| Exports | 70,169 | 53,095 | 32.2 | 67,437 | 4.1 |
| Net sales | 84,067 | 66,758 | 25.9 | 79,887 | 5.2 |
| Material costs | (52,800) | (42,090) | 25.4 | (50,447) | 4.7 |
| Purchases | (330) | (331) | (0.2) | (228) | 44.5 |
| Personnel costs | (13,890) | (11,213) | 23.9 | (12,726) | 9.1 |
| Other overheads | (9,090) | (7,432) | 22.3 | (8,821) | 3.1 |
| Operating profit | 7,958 | 5,693 | 39.8 | 7,664 | 3.8 |
| OPM (%) | 9.5 | 8.5 | 94 bps | 9.6 | (13) bps |
| Depreciation | (2,129) | (1,873) | 13.7 | (2,174) | (2.1) |
| Interest | (814) | (578) | 40.9 | (703) | 15.8 |
| Other income | 37 | 45 | (18.8) | 48 | (24.0) |
| PBT | 5,051 | 3,288 | 53.6 | 4,835 | 4.5 |
| Tax | (1,148) | (1,378) | (16.7) | (1,566) | (26.7) |
| Effective tax rate (%) | 22.7 | 41.9 | 32.4 | ||
| Other provisions / minority etc | (1,588) | (297) | 435 | (1,042) | 52.4 |
| Adjusted PAT | 2,316 | 1,613 | 43.6 | 2,228 | 4.0 |
| Adj. PAT margin (%) | 2.8 | 2.4 | 34 bps | 2.8 | (3) bps |
| Foreign exchange (loss)/gain | 709 | 346 | 268 | ||
| Reported PAT | 3,025 | 1,959 | 54.5 | 2,496 | 21.2 |
| Ann. EPS (Rs) | 20.6 | 13.3 | 54.5 | 17.0 | 21.2 |
Standalone Operations
Standalone business reported revenues at Rs12.5bn (4.6% lower than estimates) implying a growth of 1.5% yoy in a weak domestic auto market. While the domestic revenues were down by only 2.8% export revenues were strong with a 28.5% yoy jump. While the exports markets have been slow, we note that there has been steady increase in exports to SMR entity from the standalone business. Management will look for similar opportunities in the SMP business also going ahead. MSSL’s standalone business witnessed a healthy operating performance wherein the OPM (excl forex effect) was recorded at 22% better than our estimates.
Result table (Standalone)
| (Rs m) | Q4 FY14 | Q4 FY13 | % yoy | Q3 FY14 | % qoq |
| Domestic | 10,226 | 10,521 | (2.8) | 9,181 | 11.4 |
| Exports | 2,007 | 1,561 | 28.5 | 1,681 | 19.4 |
| Net sales | 12,502 | 12,321 | 1.5 | 11,059 | 13.0 |
| Material costs | (6,432) | (6,700) | (4.0) | (5,956) | 8.0 |
| Purchases | (306) | (330) | (7.0) | (230) | 33.4 |
| Personnel costs | (1,277) | (1,117) | 14.3 | (1,222) | 4.5 |
| Other overheads | (1,758) | (1,469) | 19.7 | (1,552) | 13.3 |
| Operating profit | 2,729 | 2,706 | 0.9 | 2,100 | 30.0 |
| OPM (%) | 21.8 | 22.0 | (13) bps | 19.0 | 284 bps |
| Depreciation | (368) | (429) | (14.2) | (396) | (7.0) |
| Interest | (113) | (128) | (11.6) | (117) | (3.8) |
| Other income | 572 | 166 | 244.9 | 15 | 3,661.8 |
| PBT | 2,820 | 2,314 | 21.8 | 1,602 | 76.0 |
| Tax | (920) | (729) | 26.2 | (539) | 70.6 |
| Effective tax rate (%) | 32.6 | 31.5 | 33.7 | ||
| Adjusted PAT | 1,900 | 1,585 | 19.8 | 1,063 | 78.8 |
| Adj. PAT margin (%) | 15.2 | 12.9 | 233 bps | 9.6 | 559 bps |
| Foreign exchange (loss)/gain | 225 | 207 | 174 | ||
