Despite the weak demand for vehicles globally, Sivardhana Madrasan performed strongly in the December quarter. The company’s performance was broadly in accordance with market estimates as weakening on the revenue front led to better gross margin and other expenses.
However, due to decrease in demand, Outlook has been affected in the near future. But a sharp fall in prices and strong performance of the third quarter have removed investors’ concerns over growth and evaluation. The shares of this major company making vehicle Palpaza have fallen by more than 15 per cent last month.
The company’s integrated revenue increased by about 8 per cent due to the strong performance in the emerging business as well as in the module and polymer segment. The sales from the wiring harness and vision system made some compensation for the benefits of other segments. However, the revenue of wiring harness has declined by 1 per cent on an annual basis. But Brokerage says that it has been largely stable in view of demand concerns in commercial vehicle markets in Europe and North America. The revenue growth of the vision system business slowed due to adverse platform/model mixture in North America. Revenue from sources with merger-acquired sources was 8 per cent of total sales. However, the company’s own sales declined by 1 per cent on an annual basis due to global auto production weakness.
However, the increase in integrated sales was in high single points. Nevertheless, the company is performing better than the global vehicle market, with a decline of 1.2 per cent compared to the same quarter of the previous year. Revenue growth was weak but the company recorded a 16 per cent increase in its operating profit which was estimated. The operational benefit margin increased to 9.7 per cent with an increase of 70 basis points due to better profitability in wiring harness and integrated assembly.
In view of the dull possibilities, most of the brokerage has cut its income estimates by 3 to 5 per cent for the next few years. However, the sages of Kotak Research and Praveen Poradi believe that the company will perform better than mixed market growth. It will be led by a strong order book and the association of new product.
Apart from this, the entry into new markets through acquisitions, insouring of polymer-related products will also help with the expansion of the group’s SAS (automotive) business and increase in content, as customers are turning to electric vehicles (EV) globally. Are and the trend of premiums in various segments is increasing.
Brokerage has increased the share price rather than decreasing as its price has declined by 24 per cent in the last three months.
Motilal Oswal Research also hopes that the company will continue to perform better than global automobile sales that will be promoted from premiumization and EV Transition, Auto and Non-Auto strong order backlog and successful integration of recently made acquisitions. However, Aniket Mhatre and Ambar Shukla of Brokerage have reduced the income 26 income by 15 per cent, keeping in mind the recession in demand in major areas.
The stock has declined in the last few months as investors are concerned with uncertainty about the ongoing recession and duty obstacles in some of its major areas. They may affect global business. However, in the third quarter, the strong performance shows the company’s flexible stance on the business and this can help in removing these concerns. Brokerage has given it a purchase rating.
The stance of Nuwama Research is constructive on the company’s possibilities based on strong management capacity, initiative for merger-acquisition, pending order book and increasing content. Brokerage has repeated its purchase rating.
First Published – February 19, 2025 | 10:41 pm IST
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