Motherson Sumi Systems Ltd

Transcription

1 August 10, 2015 RESULT UPDATE - Q1FY16 Motherson Sumi Systems Ltd Sensex: CMP: INR 349 Target: INR 378 Auto Ancillaries MSSL's Q1FY16 results were inline with our estimates on the topline whereas bottomline came in higher than estimates due to lower than expected interest cost & minority interest and higher than anticipated other income. The company reported robust topline growth in Euro for both SMR (up 17.6% YoY) & SMP (25.4%) but ~15.0% YoY depreciation of Euro vis-à-vis INR resulted in revenue growth of mere ~11.8% in rupee terms. We maintain our positive view on MSSL but change our rating from BUY to HOLD because of recent run up in stock price while retaining our target price of INR 378 based on 12x FY17E EV/EBITDA. Consolidated PAT up 49% MSSL reported topline growth of 11.8% to INR 94 bn which was primarily led by growth in overseas business. COGS as a % of sales declined by mere 103 bps to 61.4% as (1) engineering plastics have not seen significant decline in cost & (2) MSSL had to pass on some of the decline in commodity costs to OEMs. Employee costs grew 16.7% YoY to mn (19% of sales v/s 18.2% YoY) on the back of appraisals and hiring of employees for newly commenced plants. Other expenses declined 30 bps to 11.0% of sales. Start up costs relating to 14 new plants led to limited EBITDA margin expansion of 50 bps to 8.6%. PAT clocked in growth of 49% to INR 2816 mn. Other income boost to standalone PAT Standalone operations got a boost from INR 611 mn of other income, excluding which standalone PAT was down by 9.7%. Revenue was largely flat at INR mn as the company had to pass on the benefit of Yen depreciation and decline in copper costs. MSSL had witnessed domestic volume growth of 4.5%. COGS as a % of sales declined 73 bps to 55.7% whereas employee cost expanded 72 bps to 13.0%. Other expenses declined 32 bps to 14.0% of sales. The company garnered INR 355 mn from sale of stake in JV with Woco Franz Josef Wolf Holding GmbH. Robust growth for SMR & SMP SMP reported revenue growth of 25.4% YoY in Euro (Revenue- Euro 666 mn) whereas SMR clocked in growth of 17.6% YoY to Euro 345 mn but 15% YoY depreciation of Euro against INR arrested the robust growth resulting in growth of only 7.4% for SMP and revenue degrowth of 3.1% for SMR in rupee terms. EBITDA margin expanded by 19 bps for SMP and contracted by 16 bps for SMR and stood at 6.2% & 9.0% respectively. Other highlights (1) The wiring harness business of Stoneridge (USA), i.e. MWSI, which MSSL had acquired last year, has now turned profitable and MWSI is now eyeing new orders for growth. (2) MSSL is closely watching the Chinese market conditions. Currently China accounts for 7%-8% of total business for MSSL. Outlook & Valuation The demand outlook continues to be strong across US & Europe. On the domestic front too, PV industry is on the revival path. MSSL's EBITDA margin has increased across all the three entities driven primarily by reduced raw material costs and better utilization of plants. With improvement in overall business through increased internal sourcing by subsidiaries, ramp up of new plants and improvement in utilization levels, we expect MSSL's consolidated revenues & profits to register a CAGR of ~14.5% & ~27.1% respectively between FY15-17E. We maintain our positive view on MSSL but change our rating from BUY to HOLD because of recent run up in stock price while retaining our target price of INR 378 based on 12x FY17E EV/EBITDA. Shareholding (%) Jun-15 Promoters FIIs DIIs 5.19 Others 10.4 Relative Price Performance Aug-14 Sep-14 Oct-14 v-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 MSSL Prashant Biyani prashant.biyani@spagroupindia.com Ph (Ext. 833) Sensex Key Data BSE Code NSE Code MOTHERSUMI Bloomberg Code MSS IN Reuters Code MOSS.BO Shares Outstanding (mn) Face Value 1 Mcap (INR bn) Week H/L / W Avg. Vol, NSE Free Float (INR bn) Beta (INR mn) FY14 FY15 FY16E FY17E Net Sales Growth (%) 20.21% 15.13% 13.18% 15.80% EBIDTAM (%) 8.84% 8.72% 9.14% 9.73% Adj. PAT Growth (%) 73.97% 15.64% 21.13% 33.45% Adj. EPS (INR) P/E (x) EV/EBIDTA Net Debt/Equity RoACE (%) 25.00% 26.27% 29.56% 36.34% RoAE (%) 25.29% 25.95% 25.08% 27.86%

2 Consolidated Quarterly Performance Particulars (INR Mn) Q1FY16 Q4FY15 QoQ% Q3FY15 Q2FY15 Q1FY15 YoY% Net Sales % % Other Income % % Total Income % % Raw Material Consumed % % Stock Adjustment (469) (207) % (644) (4551) (2328) % Purchase of Finished Goods % % Employee Expenses % % Loss on Forex Transaction 53 (312) NA % Other Expenses % % TOTAL EXPENDITURE % % EBITDA % % Depreciation % % EBIT % % Interest % % PBT % % Tax % % PAT % % Minority Interest After NP % % Profit/Loss of Associate Company (1) 1 NA NA Extra-ordinary Items (158) 29 NA 11 (620) (249) % APAT % % Equity % % Face Value % % EPS % % EBITDA (%) 8.62% 9.89% (128 bps) 9.06% 7.29% 8.12% 50 bps OPM (%) 8.88% 9.97% (109 bps) 9.13% 7.35% 8.18% 70 bps APATM (%) 3.00% 3.56% (56 bps) 2.77% 2.08% 2.25% 75 bps 2

3 Standalone Quarterly Financials Partioculars (INR Mn) Q1FY16 Q4FY15 QoQ% Q3FY15 Q2FY15 Q1FY15 YoY% Net Sales % % Other Income % % Total Income % % Raw Material Consumed % % Stock Adjustment 126 (254) NA (62) (221) (74) % Purchase of Finished Goods % % Employee Expenses % % Loss on Forex Transaction 7 (56) NA (14) 99 (73) NA Other Expenses % % TOTAL EXPENDITURE % % EBITDA % % Depreciation % % EBIT % % Interest % % PBT % % Tax % % PAT % % Equity % % Face Value % % EPS % % EBITDA (%) 17.20% 20.62% (341 bps) 17.27% 17.25% 17.54% (33 bps) OPM (%) 22.15% 20.77% 138 bps 17.44% 20.56% 17.74% 441 bps PATM (%) 12.82% 11.39% 143 bps 9.18% 11.38% 9.01% 382 bps 3

4 Financials Income Statement Net Sales Growth in Sales (%) 20.21% 15.13% 13.18% 15.80% Cost of goods sold Employees Cost Other Expenses Total Expenditure EBIDTA (without OI) % Growth 62.57% 27.62% 18.68% 23.29% EBITDA Margin % 8.84% 8.72% 9.14% 9.73% Depreciation/Amortization 8,172 9,206 10,387 11,557 EBIT 15,633 21,173 25,666 32,891 EBIT Margin % 5.14% 6.04% 6.47% 7.16% Interest Expense 2,943 3,178 3,202 2,896 Other Income 3, Exceptionals EBT 15,796 18,172 22,658 30,209 Tax Expenses 4,994 5,256 7,300 9,717 PAT 10,802 12,916 15,357 20,492 Minority Interest 3,316 4,294 4,914 6,557 APAT 7,484 8,625 10,448 13,942 % Growth 73.97% 15.64% 21.13% 33.45% APAT Margin % 2.45% 2.46% 2.64% 3.04% Key Ratios Year End March FY14 FY15 FY16E FY17E Per Share Data (INR) Adj. EPS Growth (%) 15.98% 15.64% % 33.45% CEPS DPS BVPS Return Ratios (%) RoCE 25.00% 26.27% 29.56% 36.34% RoNW 25.29% 25.95% 25.08% 27.86% Liquidity Ratios Net Debt/Equity Interest Coverage Ratio Current Ratio Efficiency Ratios Asset Turnover Ratio Inventory Days Debtor Days Creditor Days Valuation Ratios P/E (x) P/BV (x) P/CEPS (x) Dividend Yield (%) EV/Net Sales (x) EV/EBIDTA (x) Balance Sheet Sources of funds Share capital Reserves & Surplus Total Networth Minority Interest Total Debt Total Liabilities Application of funds Net Block Capital Work-in-Progress Investments Total Current Assets Total Current Liabilities Net Current Assets Other Assets Total Assets Cash Flow EBT Less: Other Income Add:Depreciation Add: Interest paid Direct taxes paid Change in Working Capital (14756) 877 Cash Flow from operations (a) Change in Fixed Assets (18911) (16546) (16918) (18000) Change in CWIP (2612) 2153 (1082) 0 Change in Investments (33) Cash Flow from Investing (b) (21401) (12835) (13465) (18257) Change in Equity Debt Raised/(Repaid) (642) 2932 (2581) (7000) Dividend paid Interest paid (2943) (3178) (3202) (2896) Others 8 (17285) (5719) 3687 Cash Flow from Financing (c ) (2145) (14950) (8407) (2297) Net Change in Cash (a+b+c) (11042) 845 Opening Cash Closing Cash

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