Sunday, August 9, 2015

Motherson Sumi Systems Limited - Annual Report Analysis - Part 5

Financial Analysis

Financial performance of Motherson Sumi over 5 years FY11 to FY15
Category Particulars FY15 FY14 FY13 FY12 FY11
Operational Dividend Payout 37.0% 34.0% 31.0% 40.0% 32.0%
Profitability Gross Margin 37.5% 36.4% 34.9% 35.4% 37.6%
EBITDA Margin 8.0% 7.9% 5.8% 6.0% 9.3%
EBIT Margin 5.3% 5.2% 3.0% 3.5% 6.3%
Net Profit Margin 3.7% 3.6% 1.8% 1.3% 5.4%
Performance Return on Equity 25.9% 25.9% 19.4% 13.9% 24.3%
Return on Average Capital Employed 26.0% 26.0% 18.0% 15.0% 27.0%
Efficiency Receivables Days       32.99       37.06       42.92       49.02       42.30
Inventory Days       59.33       55.48       53.73       62.86       73.61
Payable Days       75.56       68.55       69.52       80.66       79.45
Net working capital (Days)       16.77       23.99       27.13       31.21       36.46
Growth Net Sales Growth 13.7% 20.2% 71.3% 79.1% 23.1%
EBITDA Growth 15.0% 62.3% 65.5% 16.4% 134.4%
EBIT Growth 16.2% 107.2% 48.6% -1.4% 676.0%
PAT Growth 17.8% 143.4% 129.6% -55.7% 89.7%
Financial Stability Total Debt / Equity         0.75         1.05         1.60         1.75         0.49
Current Ratio         1.11         1.00         0.98         1.02         1.13
Quick Ratio         0.67         0.59         0.60         0.67         0.71

Source: Annual Reports FY11 to FY15

Valuation
At its current price of Rs. 348, the stock is trading at price-to-earnings multiple of around 81x and trailing 12-months EPS of Rs. 4.26 per share. Over last 5 years, return generated by MSSL is almost 500% 


Source: Moneycontrol


After MSSL got listed in FY1994, it has regularly declared dividend and also declared bonus at regular inverval. Overall, it generated value of 2277times its IPO price


Source: Investor Presentation

With favourable macro factors like high proportion of youth, dual income families and thereby higher disposable income would led to higher demand for automobiles vehicles in India. This in turn, would improve demand for auto ancillary and benefit would flow to companies like Motherson Sumi systems limited. Also, the company has demonstrated strong management execution capabilities, good corporate governance track record. Thus, it can be concluded that Motherson has good growth prospects.

Disclaimer: Annual Report Analysis should not be considered as stock recommendation.