Motherson Sumi Systems hits new high

Since January 30, the stock has rallied 29% compared to 0.7% fall in Sensex on reporting over two-fold jump in net profit.

Motherson Sumi Systems Limited (MSSL) has soared 6.4% at Rs 232, also its record high on the Bombay Stock Exchange (BSE).

Since January 30, shares of auto parts and equipment maker has rallied 29% from Rs 180 compared to 0.07% fall in benchmark S&P after the company has delivered its best ever results in revenues as well as operating margins for the third quarter ended December 31, 2013 (Q3).

The company has reported almost two-and-half fold increase in its consolidated net profit at Rs 250 crore for Q3FY14 against Rs 103 crore in the same period last fiscal.

Net sales during the quarter under review grew 20% yoy at Rs 7,890 crore, due to execution of orders at subsidiaries Samvardhana Motherson Reflectec (SMR) and Samvardhana Motherson Peguform (SMP) as well as a favourable currency in the three months ended December.

The company has reported EBITDA margin at 9.6%, as SMR reported double-digit margins of 10.1% given improving utilization levels amidst healthy demand in the US. Management highlighted that new orders at SMP will start ramping up from Oct'14 onwards.

However, analyst at JP Morgan in report dated February 3, reiterate Overweight stance on MSSL with target price of Rs 225, given healthy profitability, an improving demand environment (particularly in Europe) and new order wins.