According to HSBC, Q4 could be another slow quarter for the auto ancillary company but FY20/21 would be strong.
Motherson Sumi Systems shares fell over a percent intraday on April 12 after British investment firm HSBC maintained its buy call on the stock but slashed price target to Rs 170 from Rs 233 per share.
The stock fell nearly 14 percent in last one month when the market was strong. It was quoting at Rs 148.00, down Rs 1.70, or 1.14 percent on the BSE, at 12:18 hours IST.
"Our target price factors in slower car market & rupee appreciation against euro," said the brokerage which also cut earnings estimates by 15-30% to factor in that weaker domestic & global car markets.
According to HSBC, Q4 could be another slow quarter for the auto ancillary company but FY20/21 would be strong. "We are positive on longer term and company will benefit from rising role of auto component suppliers."
Domestic car market now seems to have bottomed now, it said, adding, pre-buying of vehicles is likely supporting growth in FY20.
With all new SMP plants in operation since Q3, ramp-up should begin and SMP margin expansion should become visible over the next two-three quarters, HSBC feels.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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