Motherson Sumi Q3 profit falls 38%; key highlights of analyst concall

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Motherson Sumi Systems on February 10 reported a 38.6 percent decline in its consolidated profit at Rs 340.32 crore for the quarter ended December 31, 2019.

The company had posted a consolidated profit of Rs 554.99 crore in the year-ago period.

The consolidated income during the October-December period declined to Rs 15,739.38 crore, over Rs 16,533.99 crore in the year-ago period.

Here are key highlights from NTPC's conference call with Narnolia Financial Advisors:

Management Participants: Vivek Chaand Sehgal - Chairman, Pankaj Mittal - COO, GN Gauba - CFO

According to the management of Motherson Sumi Systems, Indian consumers seem confused due to BS-IV to BS-VI emission changeover and the demand may improve from April 1, 2020, once the transition will be complete. The management stated that the second-hand car demand has reached its peak which suggests the demand will improve for new cars in the domestic market.

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There is a possibility that production can hamper globally due to coronavirus causing a shortage of components sourced from China. China accounts for 7 percent of the company's revenues. The demand scenario in the European market has seen a gradual improvement in the last 2-3 months.

Brazilian passenger car market has not been improving and hence the capital expenditure done on new products has been completely impaired in order to avoid any future risk, the management said.

The management is completely focused on improving the profitability of the new SMP Alabama plant in terms of cost efficiencies and employee rationalisation. The plant will be supplying to Daimler. SMR business has seen 9 percent YoY decline due to weakness in the Korean and Indian market.

The PKC business has declined by 7 percent YoY because of the slowdown in the production of commercial vehicles in the United States and Europe. The company has a 65-70 percent market share in the US. Margins have declined due to an increase in copper prices while net debt as of Q3 FY20 stands at Rs 11,484 crore as against Rs 11,784 crore in Q2 FY20, the management added.