Motherson Sumi down 18% in 5 sessions; Europe exposure, semiconductor supply hit weigh

Motherson Sumi is under pressure and is down almost seven percent in trade today (March 8). The year the stock has almost halved from the start of 2022 and the reason is that it has a big exposure to the European markets. In the last 5 trading sessions, the stock is down 18 percent and in the past six months, it has fallen 42 percent.

The company's demand-supply has been hit and is under pressure because of the Russia-Ukraine situation.

Motherson Sumi’s top three global customers are Mercedes Benz - where they get 11 percent of their revenue; Audi, which is 10 percent of the revenue and Volkswagen with 8 percent revenue. All three have shut their plants in Russia at the moment.

The company's top 20 customers, including Mercedes, Audi, Volkswagen, Hyundai, Porsche, Renault account for 73 percent of Motherson’s revenue.

The Russian plants shut down means that Motherson's supply will take a hit. Their orders may get hit for auto ancillary companies.

Motherson gets 15 percent of its revenues from Germany, and about 10 percent of its revenues from France and Spain.

There is also a possible semiconductor shortage that could get hit supply and this is not the first time the companies are facing this. Infact he auto industry had just about started recovering from the crisis in January this year.

In Q3, Motherson's two subsidiaries that are present in Europe - SMR and SMP, were under pressure. For SMR the Q3 revenues were down 15 percent while SMP saw its EBIT halve in Q3.  With the added Russia-Ukraine situation, there could be more pain in store.