Samvardhana, Suprajit Engg, Goodluck shares slip as BMW cuts FY24 guidance

Shares of domestic auto component suppliers took a beating on Wednesday after Germany-based automaker BMW cut its Ebit margin and RoCE guidance due to escalating recall costs and delivery stops

Shares of automotive component manufacturers Samvardhana Motherson International, Suprajit Engineering and Goodluck India slipped up to 3.6 per cent after German automobile company BMW trimmed its guidance for FY24.

"The Board of Management of BMW AG adjusted the guidance for the 2024 financial year today," the company's release stated.

As per the release, the BMW group has cut its earnings before interest, tax (Ebit) margin guidance for FY24 to 6-7 per cent, from the earlier guidance of 8-10 per cent. The automaker also decreased its Return on Capital Employed (RoCE) guidance to the range of 11-13 per cent, from 15-20 per cent earlier.

According to the company's press release, the guidance cut was triggered by additional headwinds in the automotive segment resulting from delivery stops and technical actions linked to the integrated braking system (IBS) that is provided by a supplier, as per the release.

The company stated, "the delivery stops for vehicles that are not already in customers hands will have a negative worldwide sales effect in the second half of the year." 

It added that the IBS-related technical actions impact over 1.5 million vehicles and will result in additional warranty costs in the vicinity of a  high three-digit million amount in the third quarter.

The impact of BMW's troubles could also be seen in the stocks of its Indian suppliers, as the company contributes to 5 per cent of Samvardhana Motherson's consolidated top-line, while it is also a client of Suprajit Engineering and Goodluck India, among others.

At around 11:34 AM, shares of Samvardhana Motherson were down 2.56 per cent, and Suprajit Engineering shares were down 3.98 per cent. 

Meanwhile, Goodluck India shares declined 2.1 per cent in morning deals but recovered and rose 0.83 per cent, compared to the BSE Sensex's decline of 97.62 points at 82,018.

Shares of German-listed BMW also plunged after the company disclosed the spiraling cost of recalling 1.5 million vehicles affected due to faults with their Continental AG braking systems.

While the cars remain safe, drivers may have to push the brake pedal harder and some assistance systems may not work as effectively, according to a BMW spokesperson. For Continental, the issues will be a drag on plans for a potential listing of its auto business, the latest move in a string of troubled attempts to revive returns for the company. READ MORE

In the past one year, shares of Samvardhana Motherson have gained 87.4 per cent, Goodluck India shares have advanced 99.2 per cent and Suprajit Engineering shares have surged 30.8 per cent, compared to the BSE Sensex's rise of 22 per cent during the same period.