Motherson Sumi gains 2%, hits 52-wk high as CRISIL reaffirms credit ratings

Motherson Sumi said that its long term rating has been reaffirmed to CRISIL AA+, with 'Stable' outlook from the earlier 'negative'

Shares of Motherson Sumi Systems, on Wednesday, rose 2.4 per cent to hit a fresh 52-week high of Rs 238.20 on the BSE after rating agency CRISIL reaffirmed the company's ratings.

In an exchange filing, the company said that its long-term ratings has been reaffirmed to CRISIL AA+, with 'Stable' outlook from the earlier 'negative'. Short-term ratings has been reaffirmed to CRISIL A1+.

At 11:25 AM, the stock was trading 1 per cent higher at Rs 234.85 as compared to the benchmark Sensex's 0.9 per cent gain. Around 80.8 lakh shares have changed hands on the NSE and BSE, combined, so far.

In Q3FY21, Motherson Sumi Systems' consolidated profit after tax (PAT) more-than-doubled to Rs 798 crore from Rs 271 crore in the corresponding quarter of previous fiscal. Earnings before interest, taxes, depreciation, and amortization (Ebitda), meanwhile, grew 56 per cent year on year (YoY) at Rs 2,041, while margins improved 300 basis points (bps) to 11.4 per cent during the quarter.

On a standalone basis, the company posted robust performance with 27 per cent YoY growth in revenues and 49 per cent growth in PAT.

Analysts at Emkay Global Financial Services have raised the company's FY21-23E EPS by 21-55 per cent, on the back of better margins and improving demand outlook.

"Our positive view is underpinned by strong management capability, expectations of a cyclical upturn in underlying Auto segments in both domestic and global markets, and better profitability across divisions," the brokerage firm said in results update.

In addition, the proposed restructuring exercise aligns interests of all stakeholders and creates a platform for future growth through both inorganic and organic routes.

Reduced stake of Sumitomo Wiring Systems in Motherson Sumi Systems will allow pursuing acquisition opportunities more aggressively. This restructuring exercise is a step toward the company’s Vision 2025 – revenue target of $36 billion with ROCE of 40 per cent, it said.