Moody's upgrades rating outlook for Motherson Sumi to stable

Moody's Investors Service on Tuesday, April 12, 2021, revised the rating outlook on Motherson Sumi System Ltd's - one of the country's largest auto parts manufacturer - to stable from Negative. The credit rating firm affirmed the Ba1 corporate family rating of the company on the back of swift recovery and profitability in the second half of FY21 and prospects of double-digit growth in the current fiscal.

Motherson Sumi in a regulatory filing said, "The rating agency, namely, Moody's Investors Service ("Moody's") has revised and improved the Rating Outlook to 'Stable' from "negative" while affirming the Ba1 corporate family rating (CFR) to Motherson Sumi Systems Limited."

The improved outlook with the affirmed rating reflects the sustainability of earnings and de-leveraging witnessed in the last two quarters despite growth challenges due to the global pandemic. The company's 3CX10 strategy has helped diversify revenue and customer dependence making the underlying business more resilient.

Also, the turnaround witnessed in the company's loss-making green-field facilities has also contributed to the improvement in earnings in recent quarters. The proposed re-organisation of the group, will incrementally boost cash flows and strengthen the quality of earnings further and thus outweigh the minor increase in leverage.

Established in 1986 as a joint venture with Sumitomo Wiring Systems, Motherson Sumi Systems Limited (MSSL) is one of the world's leading specialised automotive component manufacturing companies for OEMs. With a diverse global customer base of nearly all leading automobile manufacturers globally, the company has a presence in 41 countries across five continents. It is currently the largest auto ancillary in India and among the Fab 50 companies of India by Forbes magazine. M