Motherson Sumi surges 23% in two days on strong earnings show in Q3

Shares of Motherson Sumi Systems hit a fresh 52-week high of Rs 221, up 12 per cent in the intra-day trade, on the BSE on Monday after the company reported its highest-ever quarterly revenue of Rs 17,923 crore, up by 15 per cent over the previous year quarter, in Q3FY21. The stock has surged 23 per cent in the past two trading days. 

Thus far in the month of February, the stock of the auto ancillary company has rallied 53 per cent, as compared to a 12.5 per cent surge in the S&P BSE Sensex.

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.

Driven by better margins and improving demand outlook, analysts at Emkay Global Financial Services have raised FY21-23E EPS by 21-55 per cent.

"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 USD36 billion with ROCE of 40 per cent, it said.

At 12:49 pm, the stock was trading 10 per cent higher at Rs 218 on the BSE, as compared to a per cent rise in the S&P BSE Sensex. Trading volumes on the counter more-than-doubled with a combined 82 million equity shares having changed hands on the NSE and BSE till the time of writing of this report.