Motherson Sumi Systems, India’s largest manufacturer of auto components reported its second-quarter today (Nov 12, 2021).
The company’s consolidated PAT fell 35.8% YoY to Rs. 217 crores in Q2 FY22 compared to Rs. 338 crores in the same quarter last year. On a sequential basis too, the consolidated PAT fell 25% from Rs. 290 crores reported in the last quarter.
The total revenue from operations also fell, albeit marginally. The fall was recorded at 5.9% YoY (down 12.89% QoQ) to Rs. 14,076 crores in the September quarter of FY22. Notably, the fall in the revenue was stemmed from the company’s diversification strategy of 3CX10, i.e. no country, customer, or component would be more than 10% in the company’s portfolio.
The company attributed the fall in its profitability and revenue to a sharp decrease in OEM production (Original Equipment Manufacturer). The OEM production fell considerably in key geographical areas due to supply chain constraints. These are yet to recover from the restriction put in place to contain Covid-19. There was also a reduction in the revenues of the SMRPBV, the Samvardhana Motherson Automotive Systems Group BV (a part of the Motherson Group), while the increased costs affect profitability.
The EBITDA for Motherson Sumi was recorded at Rs.162 crores which is a drastic fall of 72% YoY from Rs.586 crores reported in Q2 FY21. Even on a sequential basis, the EBITDA fell 68% from Rs.503 crores reported in the previous quarter of the current financial year.
At 13:30 hours on 12th November 2021, the shares of Motherson Sumi were trading at Rs.242.95 per share after witnessing an intraday increase of 2.40%.
The Chairman of the company, Mr Vivek Chaand Sehgal said that the global automobile industry is facing multiple challenges due to supply chain disruptions. The company’s 3CX10 strategy has helped it limit the impact of these disruptions on profits.
The company, according to the management, is focusing to control its cost and conserve its cash flow until the headwinds in the industry ease-up. This, the chairman, expects to be resolved slowly in the coming quarters.
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Research Analyst: Bavadharini KS