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ICICI Securities Report
Motherson Sumi Systems Ltd.'s Q4 FY21 operating earnings were in-line with consensus estimates as Ebitda margin came in at 10.1% (up 154 basis points YoY).
However, free cash flow generation for FY21 positively surprised consensus at ~Rs 30.3 billion leading to net debt reduction (excluding-leases) at Rs 48 billion (down ~Rs 21 billion YoY/lowest ever debt/Ebitda: 1.2 times).
Management expects Samvardhana Motherson Peguform's greenfield plants to reach profit before tax breakeven soon (we expect FY22), this is likely to boost earnings growth in FY23.
Domestic wiring harness business is likely to unlock value (post restructuring) as one of the best proxies of electrification/hybrid theme in India.
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