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Posts strong Q2FY22 results, acquires 49% stake in Stoneridge JV

News: MCL reported 31% QoQ, 11.5% YoY revenue growth to Rs.731.3 crore. Among segments, mechatronics (i.e. instrument clusters) business grew 27% QoQ while information and connected systems (i.e. wiring harness) business grew 36.8% QoQ. The company's margins expanded strongly by 510 bps QoQ to 10.6% with consolidated PAT was at Rs.39 crore vs. Rs.7 crore in Q1FY22 and Rs.25.8 crore in Q2FY21. Separately, the company has acquired 49% stake in its JV with Stoneridge (manufacturer of instrument clusters and sensors etc.), thereby making it a wholly owned subsidiary.

Views: Operational performance in the quarter was excellent, particularly on the margin front where MCL experienced not just hefty operating leverage gains but also 26 bps gross margin improvement. Strong order win momentum continued with lifetime orders won for new business worth Rs.959 crore in the quarter. MCL also won lifetime orders worth Rs.488 crore from EV players, thereby continuing to demonstrate status as a unique play on emerging India EV opportunity. The transaction for acquiring 49% JV stake values it at ~0.8x FY21 P/S.