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Informist, Monday, Jul 22, 2024

By Darshan Nakhwa

MUMBAI – Auto components manufacturer Samvardhana Motherson International Ltd is likely to report strong on-year growth in key earnings metrics for the June quarter, driven by execution of a healthy order book combined with contributions from recent acquisitions.

The company's consolidated net profit for Apr-Jun is seen at 9.18 bln rupees and revenue at 281.96 bln rupees, according to the average of estimates of seven brokerages. The bottom line is expected to surge 52.7% on year and the top line is likely to grow by 25.5% on year.

Among the estimates, the highest projection for net profit is 11.17 bln rupees and the lowest is 7.87 bln rupees. The highest and lowest estimates for revenue are 291.06 bln rupees and 274.67 bln rupees, respectively.

In a pre-earnings note, Nuvama Wealth Management said the component maker's top-line growth will be supported by organic growth in Samvardhana Motherson Automotive Systems Group BV and the acquisition of Yachiyo Industry Co's four-wheeler components business.

The company's cash profit from operations, or earnings before interest, tax, depreciation, and amortisation, is estimated at 27.40 bln rupees, up 42.4% on year. The highest projection for EBITDA is 29.88 bln rupees and the lowest is 26.01 bln rupees.

On the profitability front, brokerage firms expect the company's EBITDA margin to expand on cost optimisation, low input cost, and better net pricing. Its EBITDA margin is seen at 9.6%, compared with 8.6% in the year-ago period, according to the average of estimates from five brokerages.

On a sequential basis, Samvardhana Motherson's earnings are expected to be subdued. While the company's bottom line is projected to drop over 33% from 13.72 bln rupees in Jan-Mar, its EBITDA margin is expected to contract by 30 basis points from 9.9%. However, the component maker's top line and EBITDA are seen up by 4% and 3%, respectively.

According to Kotak Institutional Equities, factors such as a low single-digit increase in passenger vehicle production volumes in the European Union and consolidation of the Yachiyo business are likely to aid the company's top-line growth over Jan-Mar.

Samvardhana Motherson, formerly Motherson Sumi Systems, manufactures automotive components such as electrical and electronic distribution systems for power supply or data transfer, mirrors, camera-based detection systems, polymer products, and lighting for vehicles. The company has a presence in around 41 countries and supplies components to popular brands such as Audi, Mercedes-Benz, BMW and Ford.

Samvardhana Motherson will announce its earnings for the June quarter on Aug 13. According to analysts, the company's industry outlook and commentary on efforts to increase content per vehicle will be some of the key things to watch out for. 

The company's stock has gained nearly 34% since its March quarter earnings. Today, its stock closed 1% lower at 190.24 rupees on the National Stock Exchange.

Following are the Apr-Jun earnings estimates of Samvardhana Motherson, in mln rupees, based on reports from seven brokerage firms:

End

Edited by Rajeev Pai

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