Street positive on Motherson despite weak outlook, drop in Q4 revenue

Strong operating performance, falling debt keep Street positive

Motherson Sumi shares have gained close to 24 per cent in a month, half of which has come in the past week. The strong March quarter performance, falling debt, relaxation in the lockdown, and opening up of factories in key markets lifted the stock.

However, a better-than-expected March quarter — led by the Indian business — was the immediate trigger. Even though consolidated revenues fell 12 per cent, the firm managed to improve both operating profit and margins year-on-year (YoY) and sequentially.

Operating profit margins expanded by 200 basis points (bps) to 9.2 per cent, compared to estimates of under 6 per