Samvardhana Motherson Reports Q4 Revenue Growth, Declines in Profit; Announces ₹5,000 Crore NCD Plan

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Samvardhana Motherson Sees Revenue Surge Despite Q4 Profit Dip; Announces Dividend and NCD Plan

Team FS

29/May/2024

Key Points

Profit Decline and Revenue Growth: Samvardhana Motherson's Q4 net profit declined year-on-year to ₹1,372 crore, while revenue rose 20% to ₹27,058 crore.
Improved EBITDA and Margins: The company's EBITDA increased by 42.4% YoY, with margins improving to 10.8% from 9.2%.
Future Growth and Financial Moves: Announced a ₹0.80 per share dividend and a plan to raise ₹5,000 crore through NCDs, alongside reducing debt and maintaining strong financial con

Auto component maker Samvardhana Motherson reported its consolidated financial results for the fourth quarter ending March 31, 2024. The company's net profit declined, but it showed strong revenue growth and improvements in its operational efficiency.

Financial Performance Overview
For the January-March period, Samvardhana Motherson posted a net profit of ₹1,372 crore, down from ₹1,654 crore in the same period the previous year. Despite the profit decline, the company's revenue from operations rose by 20%, reaching ₹27,058 crore compared to ₹22,517 crore in the corresponding quarter of the previous year.

This increase in revenue underscores the company's ability to grow its top line even in challenging market conditions. The robust revenue growth was driven by strong performance in its core automotive business and significant contributions from its non-automotive sectors, including aerospace, consumer electronics, and health and medical industries.

Operational Efficiency and Margins
Samvardhana Motherson's EBITDA for the quarter under review stood at ₹2,934 crore, marking a 42.4% year-on-year increase. The EBITDA margin improved to 10.8% from 9.2% in the year-ago period. This improvement in margins reflects the company's focus on operational efficiency and cost management, which have been crucial in sustaining profitability amid fluctuating market dynamics.

Dividend and Shareholder Returns
The board of Samvardhana Motherson has recommended a dividend of ₹0.80 per equity share of face value of Re 1 each for the financial year 2024. This dividend proposal, which is subject to shareholder approval at the upcoming Annual General Meeting (AGM), highlights the company's commitment to returning value to its shareholders.

Debt Reduction and Financial Health
Samvardhana Motherson reported a leverage ratio of 1.4 times, better than its guidance of less than 1.6 times. The company's gross debt stood at ₹17,351 crore, down from ₹19,186 crore quarter-on-quarter. This reduction in debt is part of the company's ongoing efforts to maintain healthy financial control and improve its balance sheet.

In a release, the company emphasized its strong financial control, reduced leverage, and net debt. These measures are crucial for sustaining long-term growth and stability, providing a solid foundation for future expansion.

Future Growth Prospects
Samvardhana Motherson's automotive booked business of over $83.9 billion provides strong revenue visibility for the coming years. The company also foresees good traction from its non-automotive businesses, which are expected to contribute significantly to its growth trajectory.

To fully utilize its manufacturing capabilities, the company is setting up new facilities across emerging markets. These strategic expansions are aimed at enhancing its global footprint and tapping into new growth opportunities in high-potential regions.

NCD Plan for Future Funding
Besides its operational and financial achievements, the board of Samvardhana Motherson has approved raising up to ₹5,000 crore through Non-Convertible Debentures (NCDs) on a private placement basis. This move is aimed at securing additional funding for future growth initiatives and maintaining financial flexibility.

Market Performance
On Wednesday, Samvardhana Motherson shares were trading 2.85% higher at ₹146.05 on the NSE. The stock has risen nearly 40% so far this year, reflecting strong investor confidence and positive market sentiment towards the company’s growth prospects.

Chairman’s Statement
Vivek Chaand Sehgal, Chairman of Motherson, commented on the results, stating, "Our automotive booked business of over $83.9 billion provides strong revenue visibility. We also foresee good traction from our non-automotive businesses, such as aerospace, consumer electronics, and health and medical. To fully utilize our manufacturing capabilities, we are setting up new facilities across emerging markets."

Sehgal’s statement underscores the company’s strategic focus on diversification and global expansion, which are key drivers of its long-term growth strategy.

Conclusion
Samvardhana Motherson's Q4 results demonstrate a balanced approach to growth and profitability, with significant improvements in revenue and operational efficiency. The company's proactive measures to reduce debt and its strategic focus on expanding into new markets position it well for sustained growth.

The announcement of a ₹0.80 per share dividend and the plan to raise ₹5,000 crore through NCDs further highlight the company's commitment to shareholder value and financial stability. As Samvardhana Motherson continues to execute its growth strategies, it remains a key player in the global auto component industry, poised for future success.

Investors and stakeholders will be closely watching the company’s next moves, particularly its efforts to leverage new market opportunities and maintain financial health in a dynamic industry landscape. With a robust booked business and strategic expansions underway, Samvardhana Motherson is well-positioned to capitalize on emerging trends and drive long-term value creation.

Also Read : NBCC Shares Surge on Strong Quarterly Results, Forecast Further Gains

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Samvardhana Motherson Sees Revenue Surge Despite Q4 Profit Dip; Announces Dividend and NCD Plan

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