Motherson Sumi Systems Ltd. has given a 202% return on a year on year basis as the Auto Ancillary Stocks have rallied on recovery of the Auto sales in the current financial year 2014-15. We had published the analysis of the stock at Rs.289 per share and the current market price of the stock is at Rs.432 per share.
Motherson Sumi Systems (MSSL) is the flagship company of the Samvardhana Motherson Group and was established in 1986. It is a joint venture between Samvardhana Motherson Group and Sumitomo Wiring Systems (Japan). The Company has manufacturing bases across six continents – Asia, Europe, North America, South America, Africa and Australia to supply to OEMs. The global customer base comprises mostly all Automobile OEMs. The company is consolidating its position as a solutions provider to offer end-to-end solutions ranging from design from basic data to prototyping, tooling, moulding, assembly and integrated modules. The acquisition of mirror business from Visiocorp and Peguform has helped the company evolve as one of the world’s leading manufacturers of automotive rear view mirrors and a leading manufacturer of instrument panels, bumpers and door trims in Europe.
The company has a business portfolio of Wiring Harnesses, Modules, Rearview Mirrors, Elastomer processing, Polymer processing and Tool manufacturing, Heating Ventilation and Air Conditioning systems, Vehicle Electronics and Precision Metal Machining. The company is a leader in the passenger vehicle wire harnesses segment with a market share of 65% in India. Volkswagen is the largest client with a 20% contribution followed by Audi at 14% and Maruti Suzuki at 6% to the revenues of the company. Most of the OEMs form a part of the clientele of this company.
The Company has received many awards for excellence in Vendor performance, Quality and Design and Development from various OEMs across the globe. The company has 873 patents and 25 Design centers with a strong focus on technology as the key to its growth. The company is working towards a policy and strategy to grow its business in such a way that no single customer, country and commodity should constitute more than 15% to the turnover in order to diversify and de-risk its business.
The Company reported Sales of Rs.25,312 crores with an EBITDA of Rs.1798 crores and a net profit of Rs.451 crores in FY 2012-13. The EBITDA margin was 7.1% and the net profit margin was 1.78%. The Earnings per share was reported at Rs.7.67 and the Return on Capital Employed (RoCE) was reported at 13.3% for FY 2012-13. The company has shown a CAGR of 76.42% in revenues and the net profit has grown at a CAGR of 19.46% from FY 2008 to FY 2013.
The company had a debt of Rs.4572 crores at the end of Q2FY14 with current market capitalization of Rs.16,995 crores and Enterprise Value of Rs.21,567 crores with a Price to Earnings multiple of 38.23 at Rs.289 per share. The Price to Book Value is Rs.7.42 and the Market Capitalization to Sales ratio is 0.67. The company has not paid out dividends due to low profitability ratios and reinvestment needs for the purpose of expansion and acquisitions. The Promoters have a shareholding of 65.69% and the FIIs have a shareholding of 16.13% in the company.
The company reported a net profit of Rs.183 crores with revenues of Rs.7167 crores for the quarter ended September 2013. The operating and profitability margins were under pressure after the acquisition of mirror business from Visiocorp and Peguform but have now improved on a quarter on quarter basis.