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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 6:41 IST | India Infoline News Service
CMP Rs280, Target Rs325, Upside 16.1%

  • 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 
Result table (Consolidated)
(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
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)
(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
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