21 February 2018
Equities - India
10 Yrs G-Sec
10 Yrs AAA Corp
Flows (USD b)
Note: YTD is calendar year, *Avg
Today’s top research idea
MOTHERSON SUMI FY17: Rising CWIP weighs on RoCE
Motherson Sumi Systems’ (MSS) FY17 annual report highlights an improvement
in its operating cash flows to INR38b (FY16: INR21.9b). This was primarily on
account of release of working capital of INR6.6b, led by the increase in trade
payables by INR19.4b (FY16: INR3.3b) and the continued practice of discounting
receivables of INR18.8b (FY16: INR18b).
FCF post interest remained negative at INR34.4b on account of high capex
(INR27.8b) and acquisitions (INR41.1b). Consequently, debt increased to
INR103b (FY16: INR60b).
However, D/E was maintained at 1x with dilution and internal accruals. The PKC
acquisition led to an increase in intangibles to INR40.3b, 38% of networth
(FY16: INR3.4b, 6% of networth).
Rising CWIP and cash weighed on RoCE, which stood at 23.5% v/s RoIC ex-CWIP
Motherson Sumi: ART (FY17)
Rising CWIP weighs on RoCE
Margin improvement led by cost efficiencies
Op. performance above est., higher depreciation and tax
Employment grows 2% YoY in 1QFY18
Domestic air passengers increase ~20% in January
Piping hot news
Coal India monopoly to end as decks cleared for mining by private players
The private sector will soon be able to mine coal and sell it to power plants,
steel mills and other users, ending the decades-old monopoly of state-run Coal
India (CIL) and its affiliates, marking a long-expected reform aimed …
Chart of the Day: Ecoscope – Employment grows 2% YoY in 1QFY18
Total employment up by 70,000 in 1QFY18, lower than
the average quarterly job creation in FY17
Quarterly change in employment in the eight selected
sectors reported under QES (in k)
Data as of the first day of the quarter
Source: Labor Bureau, MOSL
Research Team (Gautam.Duggad@MotilalOswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.