The share price of Motherson Sumi Systems surged nearly 5 percent on Wednesday on positive sentiment driven by the company being confident of a recovery in Q2 and brokerage calls. The stock traded 4.83 percent higher at Rs 112.85 per share on the NSE, at 11:34 am.

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The company reported a net loss of Rs 1,191.65 crore for the quarter ended June. The company had reported a net profit for the same quarter last year of Rs 360.64 crore.

Revenue during the June quarter declined about 50 percent to Rs 8,431.23 crore. Operating loss came in at Rs 319.8 crore as compared to the profit of Rs 1,275.74 crore last year.

Vivek Chand Sehgal, Chairman of MSS said, "Our teams and plants across the globe have also resumed operations and are working closely with our customers to fulfill their requirements. We now expect demand for the auto industry to gain momentum in the coming quarters of this fiscal year."

Citi Research in its report stated that the Q1FY21 is not representative of the long-term trends despite the severe losses in the quarter.

According to CLSA, the results were below the estimates but the business was impacted due to the shutdown and negative operating leverage. Debt levels, however, are manageable, as the company continues to control working capital and investments, it said.

"MSS highlighted that 84 percent of its plants are now operating at >50 percent capacity and it expects a strong sequential improvement in Q2. Management also expects the Greenfield plants in SMP should start to turn Ebitda positive as they have managed to reduce operational costs and excess manpower," the report added.

Looking at the revenue recovery, the brokerage increased its target price on the stock to Rs 120 from Rs 110, with 'outperform' recommendation.

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