Motherson Sumi: Margin worries near term overhang for auto component maker

Growth in client volumes of Motherson Sumi and easing up of supply chain issues could be triggers.

Hit by higher raw material costs and supply chain issues, the December quarter (Q3FY22) performance of the country's largest listed auto component company, Motherson Sumi, missed Street estimates. Elevated cost pressures led to a 14-16 per cent reduction of earnings estimates by Motilal Oswal Research for FY22 and FY23.

The company’s profitability on a y-o-y basis took a hit for the second quarter in a row. After a 190 basis points fall in Q2, margins in Q3 were down 380 basis points. The worst affected business was that of its component supplier to commercial vehicles, PKC, which saw a margin