Samvardhana Motherson To Continue Focus On Debt Reduction, Says COO Pankaj Mital

Samvardhana Motherson International Ltd. aims to reduce debt in the upcoming quarter, building on a strong performance in Q2, according to Chief Operating Officer Pankaj Mital.

In the September quarter of the ongoing financial year, the automotive component maker’s net profit swelled by 223% to Rs 948.81 crore from Rs 294.15 crore in the year-ago period.

Ebitda too climbed by 23% year-on-year to Rs 2,447.94 crore in the second quarter. Revenue rose 18% YoY to Rs 27,812 crore from Rs 23,527 crore.

Commenting on the results and the way forward, Mital highlighted that with a focus on debt reduction, the company aims to create room for future acquisitions.

“We believe, as we are an acquisitive company and we continue to find solutions, we have also deleveraged ourselves so that we have very good headroom. We have reduced our debt profile to one time (that) of Ebitda,” he said.

Asserting that the company expects its leverage to reduce even further in the second half, Mital said, “While this quarter is seasonally weak because of holidays in Europe and other places, and the working capital is at its peak, we do believe in the next two quarters our leverage should come down even further.”

He added, “That will give us a very strong position that wherever our customers want we will be able to find solutions and remove the pain which comes into the market.”

When asked how the company will perform in the second half, Chief Financial Officer Kunal Malani termed it a "volatile" and "an uncertain" environment and said, “Difficult to estimate whether the situation will worsen here on because we have a completely new government coming into the US, we don’t know how that is going to play out.”

He added, “We don’t know what will happen in geopolitics which to some extent has been pulling down volumes and creating issues from a working capital supply chain perspective.”

However, Malani assured that the company was positioned to be reactive to any situation. “So we don’t know how all of this will play out. So we have positioned ourselves to be reactive.”

Shares of Samvardhana Motherson International Ltd. slipped 4.2% on Wednesday to touch an intraday low of Rs 159 apiece on the NSE. The stock was trading 4.14% lower at Rs 159.16 at 1:12 pm, with the broader benchmark Nifty trading 1.04% lower at 23,634.65.

Shares of Samvardhana Motherson International Ltd. closed 3.34% lower at Rs 160.50 apiece on the NSE. In comparison, the benchmark Nifty 50 declined by 1.36% to end at 23,559.05.