Samvardhana Motherson Q3 profit misses street estimates, shares fall

Auto ancillary products maker Samvardhana Motherson on Monday reported net profit of 542 crore for quarter ended December 2023, marking an increase of 19 per cent from Rs 454 crore in the same period last year. Its profit, however, fell short of analysts’ estimates leading to fall of 5 per cent in the stock price.

Analysts polled by LSEG were expecting the Noida-based company to post net profit of Rs 725 crore. The profit miss came on account of negative hyperinflationary impact on its business in Argentina.

Samvardhana Motherson's revenue from operations rose 26.8 per cent to Rs 25,697.56 crore versus Rs 20,267.24 crore in the year ago period.

The company's earnings before interest, taxes, depreciation, and amortisation also known as operating profit rose 46.6 per cent to Rs 2,369.60 crore versus Rs 1,616.33 crore and its operating profit margin improved 124 basis points to 9.22 per cent.

“These results reflect the good performance of our business divisions. Our team's unwavering commitment to our core values of customer satisfaction and operational excellence has helped us deliver good results consistently. Reduction in Net Debt is important for us as we continue strengthening our financial position and pursuing strategic growth opportunities," said Vivek Chaand Sehgal, chairman, Motherson.

"We remain focused on delivering sustainable and profitable growth, creating long-term value for our shareholders, and positively impacting our customers, employees, and communities where we operate," Sehgal added.

During the quarter, Motherson’s leverage ratio improved to 1.7 times from 1.9 times and overall leverage is at a comfortable level. Net debt was reduced by Rs 866 crore despite M&A payouts of Rs 750 crore during Q3, the company said in an exchange filing.

The company also said that approximately 50 per cent of R. 1,800 crore growth capex has already been invested to support growth in emerging markets.

The company’s shares ended 6 per cent lower at Rs 114.10.