Motherson net up 84 pct,shares jump 9 pct

Auto parts maker Motherson Sumi Systems Ltd on Tuesday beat estimates to report a 84 percent increase in quarterly profit.

Auto parts maker Motherson Sumi Systems Ltd on Tuesday beat estimates to report a 84 percent increase in quarterly profit on increased vehicle sales,sending its shares up by as much as 9 percent.

It (the performance) is related to the very superior performance of car makers,vice-chairman Vivek Chaand Sehgal told reporters,and added that the outlook for 2010/11 was ‘positive’ as ‘customers are coming back.’

Motherson Sumi posted a profit of 1.42 billion rupees for the Jan-March quarter,as against 769 million rupees a year ago. Sales rose 133 percent to 19.3 billion rupees.

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Analysts expected the company to report a 14.8 percent dip in net profit to 655 million rupees on a revenue of 18.93 billion rupees,according to a Reuters poll of brokerages.

Motherson Sumi’s unit Samvardhana Motherson Reflectec (SMR) contributed 338 million rupees to the overall quarterly profit.

Motherson Sumi had acquired Europe-based Visiocorp’s rear view mirror business a year ago and renamed it Samvardhana Motherson Reflectec.

This acquisition increased the contribution of overseas sales to the company’s revenue from 30 percent to 70 percent in 2009/10.

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Motherson Sumi,which makes a range of auto parts from rear-view mirrors to wiring harness and high-tension cords,counts Hyundai Motor Co Maruti Suzuki,Hero Honda,Mahindra & Mahindra and Tata Motors among its clients,all of whom have seen sales surging on robust consumer demand.

Indian vehicles sales are expected to touch a record high for the second year in a row in 2010/11,as rising incomes in a rapidly growing economy boosts demand.

Sehgal said the company will continue to focus on both domestic and overseas market and demand for vehicles in Europe is still good after the expiry of cash for clunkers programme.

At 3.12 pm,shares of Motherson Sumi,which the market values at about a billion dollar,were trading up 7.84 percent at 136.20 rupees in the Mumbai market which was up 0.22 percent.