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Last Updated : Nov 22, 2019 12:14 PM IST | Source:

ITC, Motherson Sumi Systems on Morgan Stanley Focus List, rally 3-4%

Goldman Sachs maintains buy rating on Motherson, with a target price at Rs 155, implying 26.5 percent upside from current levels.

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Todays L/H

FMCG major ITC gained 2.82 percent and auto ancillary Motherson Sumi Systems' 4 percent in the morning trade on November 22.

The gains came after the two companies found a place on Morgan Stanley’s Focus List.

However, the research firm removed Container Corporation of India and Asian Paints from the list. Both stocks have corrected more than 1.5 percent each.


Goldman Sachs has maintained its buy rating on Motherson, with a target price at Rs 155, implying 26.5 percent potential upside from current levels.

The stock has gained 28 percent in the last one month against a 4 percent rally on the BSE Sensex, on the back of solid Q2FY20 results.

"As investors are also looking at improving outlook for global auto demand, we believe Motherson should see sharp improvement in earnings growth in FY21," Goldman Sachs said.

However, persistent industry slowdown can undermine its growth, it added.

Motherson Sumi Systems reported a 3.6 percent year-on-year growth in Q2 FY20 net profit due to lower tax cost. Consolidated revenue from operations rose 5.4 percent YoY to Rs 15,924.2 crore, with Samvardhana Motherson Peguform showing a 14.66 percent growth and PKC growing 6.8 percent.

The company's standalone business degrew 17.2 percent YoY. Samvardhana Motherson Reflectec (SMR) reported a 1.48 percent decline in revenue.

Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) rose 2.1 percent YoY to Rs 1,319 crore and margin contracted 25 bps YoY to 8.3 percent in Q2, but were ahead of analysts' estimates.

According to a CNBC-TV18 analysts poll, EBITDA was expected at Rs 1,244.1 crore with margin at 7.8 percent for the quarter gone by.

ITC's July-September quarter earnings also beat Street estimates, as profit grew by 36.16 percent year-on-year and revenue from operations increased 5.31 percent YoY.

Cigarette EBIT rose 7.41 percent YoY and cigarette revenue climbed about 6 percent YoY to Rs 5,326.8 crore.

Motherson Sumi Systems was quoting at Rs 126.45, up Rs 3.95, or 3.22 percent, and ITC at Rs 250.80, up Rs 5.10, or 2.08 percent, on the BSE at 1126 hours.

Disclaimer: The above report is compiled from information available on public platforms. advises users to check with certified experts before taking any investment decisions.

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First Published on Nov 22, 2019 12:14 pm
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