For Q1FY2009, Motherson Sumi Systems (MSSL) clocked a 33.2% y-o-y growth in net sales to Rs601.8 crore, which was marginally above our expectation of Rs565 crore. Sales growth came in largely on the back of 21.8% y-o-y growth in domestic market and 53.8% y-o-y growth outside India.
The company’s bottomline declined 16.9% y-o-y to Rs31.7 crore, which was slightly below our expectation for the quarter.
However, net profit includes Rs25 crore loss (Rs8.7 crore gain in Q1FY08) on account of exchange difference on restatement of liabilities in respect of FCCBs. Adjusted profit, excluding exchange difference on FCCB (net of tax), stood at Rs48.2 crore, up 49%.
During 1QFY2009, MSSL witnessed a 40bp y-o-y decline in EBITDA Margins to 12.2% (12.6%). Raw Material cost fell 56.3% (58.1%) in Q1FY09.
The road ahead
The company is now focusing on the supply of higher level assemblies and modules. Margins in this segment are comparatively higher. The company is also increasing content per car in its bid to diversify its product portfolio.
Overall, we remain positive on the company. We estimate MSSL’s net sales and PAT to grow at a CAGR of around 18% and 21% respectively, over the next two years. We are marginally revising our consolidated EPS estimates for FY2009 and FY2010 to Rs5.2 (Rs5.4) and Rs6.1 (Rs6.3), respectively.
At the CMP, the stock is trading at 14.5x FY2009E and 12.3x FY2010E consolidated Earnings (fully diluted). We maintain a BUY on the stock, with a target price of Rs111.