Buy Motherson Sumi; target Rs 195: ICICIdirect.com

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Buy Motherson Sumi; target Rs 195: ICICIdirect.com

ICICIdirect.com is bullish on Motherson Sumi (MSL) and has recommended buy rating on the stock with a target price of Rs 195 in its February 14, 2012 research report.

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ICICIdirect.com is bullish on Motherson Sumi (MSL) and has recommended buy rating on the stock with a target price of Rs 195 in its February 14, 2012 research report.

"Motherson Sumi (MSL) reported its Q3FY12 results, which were below our estimates. The consolidated topline was higher than our estimates at Rs 3772.3 crore (I-direct estimate: Rs 2311.3 crore) as SMPL (Peguform) was consolidated for 40 days (like-to-like adjusted topline: ~Rs 2621 crore). The consolidated EBITDA margin was at 6.8%, lower than our estimate of 8.9% (ex-SMPL margin at ~10.4% higher than our estimate), driven by an improved standalone operational performance (up 80 bps QoQ) at 16.4%. On a subsidiary level, Samvardhana Motherson Reflectec's (SMR) performance improved as sales grew ~36% YoY to ~Rs 1524 crore, EBITDA margins jumped 280 bps QoQ to 4.6%. The reported PAT (post concern) was a loss of Rs 24.2 crore due to notional impact of Rs 80.4 crore for unrealised forex impact on loans, another Rs 83.4 exceptional one time charge related to acquisition of Peguform Plc. The PAT less exceptional stood at Rs 141.3 crore, which is above our estimate."

"We have factored in a gradual ramp-up of the Hungary facility while the Brazil plant remains more of a fixed-cost centre for FY12-13E. However, we believe domestic growth would remain superior considering the lower base of FY12E. At the CMP of Rs 177, the stock is trading at 13.0x FY13E EPS. We have valued the stock on an SOTP basis, the total business at Rs 195/share with the recently acquired SMPL being valued at Rs 22/share. We maintain our BUY rating with 10% upside potential (TP Rs 195)," says ICICIdirect.com Research report.

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To read the full report click on the attachment