Shares of automobile component manufacturer Motherson Sumi Systems (MSS) on Friday touched new highs on the back of fresh buying in the stock as monthly car sales in the European Union for June rose at the fastest pace since 2009. The stock rose 3% intraday before ending the day at Rs 530.10, up Rs 6.30 or 1.2%.
More than 13.18 lakh MSS shares exchanged hands on the BSE and NSE, up 1.26 times the 5-day average volume and 1.23 times the 10-day average volume, data showed.
Despite the debt crisis in Greece that is rattling the continent, registration figures released on Thursday showed Europe’s car market up 15% in June, when heavy incentives and scrappage schemes were used by crisis-hit governments to stimulate demand, reported the Financial Times.
All of Europe’s big five markets posted double-digit growth in June. Germany and the UK both grew 13% each, France was up 15%; Italy by 14%, and Spain posted a near 25% rise.
The performance marked the biggest year-on-year increase in the EU’s car market for a single month since December 2009, according to Acea, the body that compiles the statistics.
Analysts said MSS’ European subsidiaries contribute about 70-75% of the company’s total revenues and bulk of it is contributed by German luxury original equipment manufacturers (OEMs) such as BMW, Volkswagen and Audi. The company may also see foreign exchange gains due to the weakness in the euro. The euro has fallen to a 6-week low against the US dollar, which makes MSS’ European subsidiaries more competitive globally, they said.
In addition to European business, MSS gets 25% of the revenues from its Indian business. Maruti and Hyundai are MSS’ two biggest customers in the passenger vehicle segment.
MSS reported ebitda earnings of Rs 890 crore and net profit of Rs 520 crore for full-year fiscal 2015. The stock has yielded 58% returns in the last one year.