Motherson Sumi Systems poised to grow
Productive acquisitions and technological collaborations have helped MSSL achieve business synergies.
Motherson Sumi Systems (MSSL) has been on an acquisition spree and is regarded as an inorganic growth specialist now. The company has successfully made five acquisitions in the past five years of about Rs 1,803 crore and has orders worth Rs 28,000
crore for FY15. MSSL is the flagship company of the Samvardhana Motherson Group and was established in 1986 as a joint venture between Samvardhana Motherson International and Sumitomo Wiring Systems, Japan.
MSSL’s product range comprises wiring harnesses, rear view mirrors, moulded plastic car parts including bumpers, dashboards and door trims, rubber components for automotive and industrial applications, high-precision machined metal parts, injection moulding tools and HVAC systems. The company has presence in 25 countries in Europe, North America and Asia, including China, and over 145 manufacturing facilities supported by technical centers located globally.
MSSL has successfully turned around its two key global acquisitions, i.e. Samvardhana Motherson Reflectec and Samvardhana Motherson Peguform.
The former is the global Tier I supplier of rear view vision systems to leading automobile OEMs such as Hyundai Kia, Ford, General Motors, Toyota, Tata JLR, BMW, Daimler and Volkswagen.
Financials
MSSL clocked consolidated net sales of Rs 34,490.31 crore in FY15 up from Rs 30,358 crore in FY14.
Its net profit jumped to Rs 862.5 crore from Rs 765 crore. Company’s net sales and profit after tax (PAT) clocked a compounded annual growth rate (CAGR) of 43.32 per cent and 21.89 per cent over 2011-15, respectively.
That said, the company’s consolidated revenues for Q1FY16 grew by 12 per cent and PAT by 62 per cent from Q1FY15.
The company has set a revenue target of $18 billion by 2020.
The management hopes to achieve 65 per cent of its revenues through its existing businesses, for which it will invest Rs 6,000 crore in the next five years, and the rest through the acquisition route.
MSSL’s product diversity coupled with sheer depth within each product portfolio has led to industry leadership.
The value of the global automotive component sector is expected to reach 620 billion euo in 2015.
Given its increasing global footprint, MSSL is well positioned. Investors with long-term horizon can go for the scrip, which has given a return of 76 per cent from January 2013 till August 2015.
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