Motherson Sumi Systems Q4FY14 Result Failed To Meet Street Estimates

Motherson Sumi Systems (MSSL), a joint venture between Samvardhana Motherson Group and Sumitomo Wiring Systems, flagship company of the Samvardhana Motherson Group came out its Q4FY14 result today. MSS on consolidated basis posted a net profit of Rs 302.53 crore for the quarter, which is higher by 54.5% compared to the same period last year. However, this failed to meet the street expectation, which was expecting 70% growth in the consolidated net profit. 

The company posted higher profit on the back of better sales growth and better operational performance. MSS consolidated total revenue grew by a tad lower than 26% and was at Rs 8406 crore for Q4FY14. Again this figure was below the street expectation of around Rs 8550 crore. The growth in sales was entirely driven by the market outside India, which grew by 32% on yearly basis and formed 85% of the total sales. Domestic sales on the other hand witnessed a marginal drop in the sales on yearly basis. 

EBITDA of the company has increased by 38% on yearly basis to Rs 796 crore in Q4FY14. The EBITDA margins too improved by 90 basis points on yearly basis for the company on back of better operational performance. Raw material consumed, though increased by 21.8% on yearly basis, has come down from 66% of the sales in Q4FY13 to 64% of the sales in Q4FY14. The overall performance of MSSL was lifted by better show by Samvardhana Motherson Peguform (SMP) German subsidiary of the company, which saw its revenue increasing by 32% on yearly basis to Rs 4251 crore for Q4FY14. Meanwhile in the same period SMP made a profit of Rs 24 crores after posting a loss of Rs 17 crore in the same quarter last fiscal.

Despite posting such impressive number, it failed to meet the expectation and hence shares of MSSL closed 2.4% lower than its previous closing of Rs 279.75. A share of MSSL is currently trading at PE ratio of 32 times, which looks fairly valued.