The Motherson Sumi stock has gained about 10 per cent in trading today after reporting better-than-expected results in the March 2016 quarter. The consolidated topline grew by 8 per cent to Rs 10,068 crore over the three months ended March 2015. A recovery in domestic car sales saw India revenues grow by 15 per cent, while international revenues ( which constitutes 85 per cent of total revenues ) moved up by 8 per cent.

Despite single digit growth in the topline, earnings got a boost from benign raw material costs and lower finance costs. The company’s raw material to sales ratio came down to 59.5 per cent in the March quarter, as against 63 per cent a year ago. Average prices of key inputs such as copper dropped by about 20 per cent during the quarter, compared with the March 2015 quarter. Fall in prices of crude-based raw materials too helped. Thanks to these factors, operating margins expanded by about 45 basis points to 10.35 per cent now. Interest costs too fell by 22 per cent to Rs 66 crore. Net profit thus grew by 21.7 per cent to Rs 414 crore.

Going forward, while the company will gain from good demand for automotives across India and the US, the Volkswagen emission scandal issue might continue to impact growth a bit in the Europe geography. Volkswagen (along with Audi) brings about 30-40 per cent of Motherson’s consolidated revenues.

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