Samvardhana Motherson International Ltd. share price target

Sector: Auto-ancillaries /Mid-Cap | Earnings Update 4QFY19 Background: Motherson Sumi Systems Limited (MSSL) is one of the world's leading, specialized automotive component manufacturing companies for OEMs. MSSL was established in 1986 as a joint venture with Sumitomo Wiring Systems. MSSL is a focused, dynamic and progressive comp any providing customers with innovative and value-added products, services and solutions. With a diverse global customer base of nearly all leading automobile manufacturers globally, the company has a presence in 36 countries across six continents. MSSL is currently the largest auto ancillary in India and among the Fab SO companies of...

Motherson Sumi Systems Ltd (MSSL) had a challenging Q4FY19. Although 11% yoy growth in the topline to INR 17169 cr in Q4FY19 was encouraging.

While underlying automotive trends are not supportive, MSS has been impacted by ramp-up issues at its recently commissioned plants (particularly the Tuscaloosa plant). These issues are transient in nature, partly due (a) teething trouble for the large greenfield plant and (b) visa-related issues. We expect a strong recovery as these plants drive growth based on orders on hand.

Growth challenges persist; business de-risking holds key! The domestic as well as global auto industry continues to undergo challenging times amid a host of changes on the regulatory (tighter emission & WLTP norms), technological (electric & hybrid vehicles) and demand (shift away from diesel) fronts. This makes for a volatile operational landscape in the case of MSSL, which is exposed to developments in multiple geographies and segments. To combat this, the company remains diligently focused on de-risking operations through its 3CX15' initiative whereby it...

Motherson Sumi (MSS) reported a subdued Q4FY19 consolidated revenue grew 11% YoY, EBITDA margins dipped 250bps to 7.2%, while adj. PAT dropped 23% to Rs 4.1bn. Despite a difficult demand situation globally, MSS remains confident of achieving its five-year vision (ending FY20), supported by a current order book of EUR 18.2bn. We, however, cut FY20/FY21 EPS by 13%/15% to factor in slower ramp-up of SMP plants. Rolling valuations...

Motherson Sumi Systems Ltd (MSSL) is one of the largest manufacturers of wiring harness, rear view mirrors and polymer body parts.

ICICI Securities Ltd | Retail Equity Research Motherson Sumi (MSL) reported a steady set of Q3FY19 numbers Consolidated revenues in Q3FY19 came in at | 16,473 crore (up 14.4% YoY). Net sales from the standalone business were down 4.0% YoY to | 1,722 crore. Further, among its subsidiaries, SMR revenue grew 1.5% YoY to 398 million (~| 3,270 crore) while SMP revenue increased 10.7% YoY to 993 million (~| 8,160 crore) Revenue from PKC operations grew 8% YoY to 292 million...

revenue acquisition, PKC (+8% YoY in USD terms) and currency tailwinds. S/A revenue declined 4% YoY, led by slowdown in the domestic auto industry and the lagged impact of copper price pass-through. SMP revenue was down ~2.6% YoY in EUR terms (like-to-like) due to the WLTP impact. YoY contraction in SMP margin due to negative operating leverage and (b) 120bp YoY contraction in S/A margin. Adj. PAT grew just 6% YoY to INR3.9b 13%/14%/3% YoY. (a) WLTP regulations impacted the SMP business, resulting in weak revenues for 3QFY19; expect WLTP impact for the next two quarters as well. (b) No change/cancellation in orders/order book due to uncertain market conditions. (c) 2020 organic growth target on track; continues to look at inorganic opportunities. (d) BS6 to result in 10-15% increase in content for PVs and 2Ws. (e) Week-long strike at Audis Hungary plant to have impact on SMRPBV in 4QFY19.

Motherson Sumi Systems' (MSS) Q3FY19 performance missed our estimates, Change in Estimates | Target | Reco particularly on account of weak operating performance by its key subsidiary, SMP, owing to demand issues in Europe as well as higher start-up costs for...