Shares of Motherson Sumi Systems gained over 2 percent after the company reported its earnings for the second quarter of fiscal 2021. The stock rose as much as 2.31 percent to an intraday high of Rs 130.35 apiece on the BSE.
The company’s consolidated net profit in Q2FY21 increased 2.7 percent to Rs 387.93 crore from Rs 377.73 crore, when compared to the same period in the fiscal before. Total revenue from operations declined to Rs 14,957.21 crore during the quarter under review as against Rs 15,259.74 crore in the year-ago period.
“Global automotive industry is on a path to recovery in the post COVID world. We are seeing a surge in demand across the globe. Our teams are geared up to fulfil the demands of our customers,” said the company Chairman Vivek Chaand Sehgal.
“Operational improvements done by our teams across the globe have resulted in improved performance of our plants. Above all, the health of our employees remains our top priority,” he added.
The company said that around 80 percent of its facilities are running at over 75 percent capacity, indicating that things have come back to near normal.
Here’s what brokerages have to say:
Motherson Sumi’s (MSS) 2QFY21 results came in better than our and consensus expectations. While consolidated revenues were 3% lower, Ebitda beat our forecasts by 46%. Global subsidiaries (SMP, SMR, PKC) surprised on profitability due to the turnaround in newer plants and cost optimisation in existing businesses, CLSA said.
The brokerage increased its FY21-23 EPS by 7-21% and raised the target price to Rs 140 per share from Rs 130 earlier and reiterated the Outperform rating.
Nomura has retained a Buy rating on the stock with a target of Rs 162 per share. It is of the view that Q2 earnings were ahead of estimates with recovery in demand likely to drive growth.
The company may witness strong earnings growth over FY22-23, Nomura said.
The brokerage has maintained an Outperform call on the stock with target of Rs 124 per share. It expects the auto ancillary company to benefit from global auto recovery adding that turn-around of greefield plants is a bottom-up catalyst.
Motherson Sumi (MSS)’s 2QFY21 operating performance was driven by strong demand recovery and improved efficiencies. SMP’s greenfield plants achieved EBITDA breakeven. MSS is well-positioned to benefit from demand recovery as well as efficiency improvement at the greenfield plants, the brokerage said.
It upgraded FY22E EPS by 7%, factoring in stronger recovery in SMRPBV and PKC. “Motherson Sumi is our preferred bet to play global recovery in Auto,” Motilal Oswal said.
The brokerage maintained Buy with a target price to Rs 150 per share.
While the revenue growth is flat on a YoY basis the company has posted a strong revenue growth sequentially of 84.3% QoQ. The sequential growth was across segments including MSSL standalone, SMR, SMP, PKC and others as all segments swung from an EBIT loss to profit. The improvement in performance sequentially has largely been due to improvement in demand from the end user industry. However, going forward the markets will be monitoring the Covid situation in Europe given that the company derives a significant part of its revenues from Europe.
At 12:45, pm the shares of Motherson Sumi Systems were trading 1.53 percent lower at Rs 129.35 on the BSE as against a 0.04 percent fall in the benchmark Sensex.
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