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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%. 

Motherson Sumi Quarterly Results Q2 FY22 – Hits

  • On a standalone basis, the total revenue from operations increased 28% YoY from Rs.996 crores to Rs.1279 crores
  • The PAT also doubled and recorded a 149% jump on a standalone basis, from Rs.152 crores to Rs.378 crores in Q2FY22

Misses

  • 35.8% YoY fall in the PAT, from Rs.338 crores in Q2FY21 to Rs.217 crores in Q2FY22. The PAT also fell 25% QoQ from Rs.290 crores
  • 5.9% YoY and 12.9% QoQ reduction in the consolidated total revenue from operations. The revenue was recorded at Rs.14,076 crores
  • 72% YoY fall in EBITDA, from Rs.586 crores to Rs.162 crores. 68% QoQ fall from Rs.503 crores reported in Q1FY22

Management comments

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. 

Other things to know about Motherson Sumi Results

  • The company is awaiting approval from NCLT for reorganization.
  • The company announced an acquisition of a 55% stake in CIM Tool (India). And a 60% stake in Nanchang JMCG Mekra Lang Vehicle Mirror Company Limited (China) in October 2021
  • The company aims to quadruple its net sales over the next five years.
  • Motherson Sumi is ramping up its business to enter the aerospace, defence, and IT sectors via strategic acquisitions.
  • Euro 2.1 billion worth of new orders were added in the first half of FY22.
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