Tag: Motherson Sumi

Motherson Sumi Q1 net profit shrinks 2% to Rs 123 cr

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Motherson Sumi Wiring India on Friday said its net profit declined by 2 percent to Rs 123 crore in the first quarter ended June 30. The company had reported a net profit of Rs 126 crore for the April-June quarter of last fiscal.

The total income, however, increased to Rs 1,859 crore compared to Rs 1,671 crore in the year-ago period, Motherson Sumi Wiring India said in a regulatory filing.

“The company continues to deliver good and consistent performance. The additional capacities, which were created over the past few quarters, have started to contribute towards revenue growth,” Motherson Sumi Wiring India Chairman Vivek Chaand Sehgal said.

Operational improvements continue to support the performance despite inflationary headwinds and supply chain issues at the customer’s end, he added. “With cost reduction initiatives in place coupled with the continued support of the customers, we believe that we will continue to deliver value to our stakeholders in the upcoming quarters as well,” Sehgal said.

Shares of the company ended 2.19 percent down at Rs 58.89 apiece on the BSE.

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Nomura sees potential upside of 19% in this wiring harness player

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Motherson Sumi Wiring India Ltd. is in focus on Thursday after global markets research firm Nomura initiated coverage on the stock with a ‘buy’ rating.

Nomura gave a price target of Rs 62 on the stock, indicating a potential upside of 19.2 percent from Wednesday’s closing price of Rs 52.

Motherson Sumi Wiring India is a leading, full-system wiring harness solutions provider in India supplying wiring harnesses to automotive original equipment manufacturers (OEMs).

According to Nomura, wiring harness content in vehicles has increased to around 4.5 percent now from nearly 2.5 percent in the past. This has resulted in an almost 10 percent compounded annual growth rate (CAGR) in Motherson Sumi Wiring’s revenue over the past 10 years despite only a 2 percent CAGR in OE (original equipment) car sales volume.

Nomura expects Motherson Sumi Wiring’s revenue to grow at a compounded annual growth rate of 15 percent until financial year 2025, factoring in a 7 percent CAGR in domestic car sales volume.

The report added that the rising SUV mix and electrification with more features in vehicles will drive stronger value growth for Motherson Sumi Wiring.

Nomura also believes that Motherson Sumi Wiring would benefit from Sumitomo’s leadership in the high voltage segment in Japan. The company gets technology expertise from Sumitomo Wiring Solutions (SWS), which holds nearly 25 percent stake in the company and is a global leader in wiring harness.

“SWS, a leader in Japan’s high-voltage cables segment, is already mass-producing many components and expects its EV revenue share to reach more than 60 percent by 2030 (from 25 percent in the fiscal year 2022). We believe this will help Motherson Sumi Wiring to capitalise on EV opportunities. In the medium term, we expect Motherson Sumi Wiring to localise and improve profitability in the segment,” the report said.

On the flip side, Nomura warned that since Motherson Sumi Wiring is dependent on the performance of the Indian automotive sector, downside risks can include lower consumer sentiment in passenger vehicles, delayed demand, or a change in government regulations.

Shares of Motherson Sumi Wiring are trading 2.13 percent lower at Rs 50.60.

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Motherson Sumi Wiring down 6% as margins under pressure

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Motherson SWI” isinid=”INE0FS801015″ bseid=”543498″ nseid=”MSUMI” sector=”Auto Ancillaries” exchange=”nse”]

Motherson Sumi Wiring India reported a mixed set of earnings for the second quarter of the current financial year (Q2FY23) as it recorded strong growth in revenue although margins contracted by 290 basis points year on year at 10.4 percent.

The company manufactures wiring harnesses in India. It go demerged from parent Motherson Sumi Systems and now has a joint venture with Sumitomo Wiring Systems.

“Because of the flurry of orders and the automotive market coming back, we needed two very urgent plants, one in Chennai and one in Bengaluru. These are one-offs and new negotiations will take place very quickly, which will settle the matter for the next half,” Vivek Chaand Sehgal, Chairman, told CNBC-TV18.

Talking about the order book, he said, “The demand is going to go up, but I do not want to guess some numbers. For us, it’s very important that we supply exactly what the customer wants and the numbers.”

Also Read: Samvardhana Motherson shares slump to 52-week low after multiple block deals

However, supply chain constraints, additional costs on freight, and extraordinary manpower costs further impacted the margins.

For the entire management interview, watch the accompanying video

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Motherson Sumi Wiring shares fluctuate after board approves 2:5 bonus issue

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The board of Motherson Sumi Wiring, the demerged entity of the erstwhile Motherson Sumi Systems Ltd. has approved a bonus issue of shares in the ratio of 2:5.

Shareholders will receive two bonus shares of the company for every five shares that they own on the record date, which is yet to be decided. The company has also approved increasing the authorised share capital of the company to Rs 900 crore from Rs 333 crore.

Shares of the company are fluctuating between gains and losses, currently trading 1.1 percent higher at Rs 87.60, as of 3 PM. The stock had rallied as much as 7 percent on Wednesday when the company announced that it will consider the issue of bonus shares at its board meeting on Friday.

Motherson Sumi Wiring was formed when the domestic wiring harness business was demerged from Motherson Sumi Systems Ltd (MSSL). The demerger came into effect from January 5, 2022.

Also Read: Samvardhana Motherson eyes Rs 300 crore revenue potential in latest acquisition

Motherson Sumi Wiring India Ltd (MSWIL) listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) in March this year.  “Motherson Sumi Wiring India will continue to strengthen the capabilities further,” MSWIL Chairman Vivek Chaand Sehgal had said in a statement.

The Noida-headquartered company is a leading player in the manufacturing of wiring harnesses, harness components, and other electric wires.

ICICI Securities initiated coverage on the stock with a “buy” recommendation and a price target of Rs 105. It expects compounded sales growth of 18 percent over the next three years.

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Samvardhana Motherson to acquire Ichikoh’s mirror business in Rs 293 crore deal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”MOTHERSON” isinid=”INE775A01035″ bseid=”517334″ nseid=”MOTHERSON” sector=”” exchange=”nse”]

Samvardhana Motherson sees plenty of synergies to increase its presence in the Japanese market and among Japanese car OEMs post the acquisition of Ichikoh’s mirror business, Vice Chairman Laksh Vaaman Sehgal told CNBC TV-18 in an interview.

Counted among the world’s largest automotive suppliers for original equipment manufacturers (OEMs), the company announced the acquisition of Ichikoh Industries’ mirror business for ¥5.2 billion (Rs 293 crore at current exchange rate).

This is Samvardhana Motherson’s first acquisition through its Vision Systems business division.

The transaction will include Ichikoh’s mirror business which develops and manufactures automotive mirrors and associated products in Japan and China, catering largely to Japanese OEMs.

Although a smaller player in Japan, a physical footprint in the country is very important to supply to Japanese carmakers and that, according to Sehgal is an advantage with Ichikoh.

Motherson will end up adding three manufacturing facilities across both the countries and 260 patents to its IP portfolio post this transaction.

“This acquisition is the next major step in line with the Group Strategy of 3CX10 with increased geographic and customer diversification,” the company wrote in its exchange filing. Motherson’s 3CX10 strategy involves ensuring that non-component, no country or no customer contributes more than 10 percent of the overall top line.

Subject to customary conditions, the transaction is likely to be completed over the next 6-8 months.

Ichikoh’s mirror business reported revenue of JPY 15.8 billion in 2021, down from JPY 22 billion in 2019. The company is a key supplier of automotive mirrors to Japanese OEMs in Japan, China, and Thailand.

This is also Motherson’s third acquisition under the vision systems business during the current five-year plan, following acquisitions in Turkey and China. The company acquired a majority stake in Turkey’s Plast Met in January last year for an undisclosed sum, followed by a majority stake in China-based Nanchang JMCG Mekra Lang Vehicle Mirror Co. Ltd. without disclosing the financial terms of the deal again.

Motherson’s Vision Systems division serves customers from 37 facilities across 18 countries. This division supplies exterior mirrors, interior mirrors, and camera-based detection systems to leading global automotive OEMs.

The transaction is EPS accretive, according to the company.

“We will be able to sell more advanced mirrors and be able to increase all parameters but since we focus on RoCE (Return on Capital Employed), we will try to get this to a 40 percent RoCE as soon as possible,” Sehgal said. Current return ratios of Ichikoh are subject to closure of the transaction.

Gurmeet Chadha of Complete Circle believes that cost pressures affected Motherson on the margin front, even as they are clear leaders in this space, especially in rearview mirrors. However, he prefers UNO Minda over Motherson but the latter continues to remain on his radar.

A few weeks earlier, Motherson had acquired Daimler India Commercial Vehicles’ frame manufacturing and assembly operations facilities in Chennai. The deal made Samvardhana the sole supplier of frame assembly to Daimler India CV for the next 10 years. The company sees a revenue potential of Rs 300 crore through this acquisition.

Shares of Samvardhana Motherson International are trading 1.6 percent lower at Rs 116.20, as of 9:40 AM.

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Samvardhana Motherson eyes Rs 300 crore revenue potential in latest acquisition

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Samvardhana” isinid=”” bseid=”0″ nseid=”” sector=”Auto Ancillaries” exchange=”nse”]

Samvardhana Motherson International — the auto parts maker formerly known as Motherson Sumi Systems — sees revenue potential of Rs 300 crore in its latest acquisition: Daimler India Commercial Vehicles’ frame manufacturing and assembly operations facilities in Chennai.

The acquisition opens up a new avenue for the company and augurs well for its business, Samvardhana Motherson Chairman Vivek Chaand Sehgal told CNBC-TV18. “We were doing contract manufacturing for them in the last year… and now (Samvardhana) becomes a full supplier,” he said.

As a part of the deal, Samvardhana becomes the sole supplier of frame assembly to Daimler India CV for 10 years.

The development comes at a time when the auto sector is struggling against a sticky surge in elevated costs eating into the margin.

Samvardhana’s margin, is at a multi-quarter low, said Sehgal. “The money is going to come, but when it comes, that’s when we will declare it in our results,” he said.

The company is actually betting big on inventory buildup, hoping to take it to pre-pandemic levels.

“Higher inventory is something a customer is already paying you for and he wants you to build inventory. So it doesn’t really bother us very much on that. And the moment, these things are  up, the semiconductor and other issues, you will find that our inventory will come down back to normal,” Sehgal said.

The management expects its levels of debt and inventory to return to normalcy as soon as supply chain-related issues ease. Sehgal exuded confidence that the company’s debut will “not be very high”.

“We always have the avenues of increasing the equity in the company. We are quite comfortable in that situation, but I believe that we don’t see a need for that in the coming next six months to one year,” he said.

Until now, Samvardhana Motherson ran the manufacturing operations of the frame manufacturing facility of DICV but the frame assembly operations were managed by DICV itself in a separate facility.

Once the transaction goes through, the auto component manufacturer will  own the assets, including long-term leasehold rights for land, and will run end-to-end operations for frame manufacturing and assembly, and supply to DICV under the long-term contract, according to its filing last week.

Samvardhana expects to close the deal in the quarter ending December 2022 subject to regulatory and other nods.

On Monday, Samvardhana Motherson shares rose by as much as Rs 1.9 or 1.5 percent to Rs 125.6 apiece on BSE, gaining for the third session in a row.

Samvardhana Motherson shares have risen about one percent in the past one month, half the Nifty50 benchmark’s return.

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Samvardhana Motherson shares rise with large volumes — here’s why

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Samvardhana” isinid=”” bseid=”0″ nseid=”” sector=”Auto Ancillaries” exchange=”nse”]

Samvardhana Motherson International shares rose more than two percent with large volumes on Friday, after the auto parts manufacturer announced the acquisition of Daimler India Commercial Vehicles’ frame manufacturing and assembly operations facilities in Chennai. The Samvardhana Motherson stock gained by as much as Rs 2.7 to Rs 125.9 apiece on BSE, before settling at Rs 123.8 apiece for the day.

A total of 6.6 lakh Samvardhana Motherson shares changed hands on the bourse during the day, as against a daily average of 4.3 lakh in the past two weeks, according to exchange data.

Samvardhana Motherson International, formerly known as Motherson Sumi Systems, said in a regulatory filing on Thursday that it had signed a strategic agreement including a long-term deal with Daimler India CV for the supply of the complete frame assembly.

SAMIL, through a wholly-owned arm, runs the manufacturing operations of the frame manufacturing facility of DICV but the frame assembly operations are managed by DICV itself in a separate facility, according to the filing.

“Once the transaction is completed, SAMIL will own the assets, including long-term leasehold rights for land, and will run end-to-end operations for frame manufacturing and assembly and supply to DICV under the long-term supply contract,” it said.

It also said the transaction is expected to close in the quarter ending December 2022, subject to customary closing conditions and necessary regulatory approvals.

Samvardhana Motherson shares have risen about two percent in the past one month, largely in line with the return in the Nifty50 benchmark.

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Samvardhana Motherson stock falls as inflation wreaks June quarter earnings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Samvardhana Motherson International Ltd (formerly Motherson Sumi Systems Ltd) tanked about 5.5 percent intraday as inflation more than halved June quarter net profit.

At 11:42 IST, shares of the company were trading 4.8 percent lower at Rs 122.45 on the BSE.

Here’s how the company performed:

#1QWithCNBCTV18 | Samvardhana Motherson reports Q1 earnings.

▶️Net profit down 51.2% at ₹141.2 cr vs ₹289.6 cr (YoY)

▶️Revenue up 8.9% at ₹17,454 cr vs ₹16,024 cr (YoY)

▶️EBITDA down 16.1% at ₹829.1 cr vs ₹988.4 cr (YoY)

▶️EBITDA margin at 4.7% vs 6.1% (YoY) pic.twitter.com/DiSuKhZRrJ

— CNBC-TV18 (@CNBCTV18Live) August 8, 2022

Despite the company reporting the highest ever quarterly revenues, Samvardhana Motherson’s net debt increased along with continued inflationary headwinds.

Consolidated net debt rose because of higher working capital requirements amid a challenging environment.

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“Debt has risen slightly, but that is because we find it much more attractive to stock, and the global currency movement has been erratic. So, we increased our inventory holding last year, which is helping us more than troubling us,”  Vivek Chaand Sehgal, Chairman, Motherson Sumi Group, told CNBC-TV18.

The company has a controlled capital expenditure plan to conserve cash.

According to Sehgal, within the next quarter or two, the company would start to see a decline in the working capital requirements and the capex. “The firm is trying to reduce capex as much as possible because it has already invested in all good new assets and the maintenance capex etc., is really very low,” Sehgal said.

Even as the company reported disappointing quarterly numbers, Sehgal said, “The market demand remains strong. However, OEM production volumes continued to fluctuate due to various supply chain constraints, including chip shortages. The passenger car sales have shown an improving trend from April to June.”

Jefferies has an ‘underperform’ call on the company’s stock with a target price of Rs 105.

The automotive component manufacturing company is facing severe inflationary pressures, which has resulted in the brokerage firm cutting earnings per share estimates by 15-31 percent for FY23-24.

Jefferies pointed out that the stock is unlikely to perform until earning downgrades ease.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow