Accumulate Motherson Sumi; target of Rs 221: PLilladher

Prabhudas Lilladher is bullish on Motherson Sumi and has recommended accumulate rating on the stock with a target of Rs 221 in its February 12, 2013 research report.
 
“Motherson Sumi’s (MSS’) Q3FY13 result was above our estimates, mainly led by higher EBITDA margin on a standalone business at 18.9percent and 7.0percent EBITDA margin at SMR level. At the same time, SMP posted strong set of numbers with a top-line of Rs33.3bn (€474m) and EBITDA margins at 4.0percent. Going forward, in our view, sales as well as margins will improve, with increased utilisation at SMR, improvement in volumes for MSIL (standalone business) and improvement in margins at SMP. At the CMP, the stock is trading 13.8x FY14E and 10.3x FY15E earnings, which in our view, is attractive, given the 40.0percent CAGR in earnings for FY12-FY15E. Hence, we re-iterate our .Accumulate. call on the stock with a SOTP-based target price of Rs221.”
 
“Net sales within India on a consolidated basis grew by 27.8percent YoY at Rs11.2bn, whereas exports increased by 87.4percent YoY to Rs54.3bn. On a consolidated basis, top-line was up 73.5percent to Rs66.6bn (PLe: Rs68.0bn), while EBITDA margins improved by 90bps YoY at 7.6percent on account of 280bps improvement in the standalone margins. As a result, the overall consolidated EBITDA doubled to Rs5.1bn in line with our estimate of Rs5.2bn. Adj. for the MTM forex loss of Rs639m, PAT grew by 20.0percent YoY to Rs1.67bn. Net sales within India on a standalone basis grew by 27.3percent YoY at Rs9.0bn, whereas, exports increased by 24.6percent to Rs1.5bn. This led to a 27.1percent YoY increase in standalone top-line to Rs10.6bn. EBITDA margins improved by 280bps YoY to 18.9percent, with EBITDA reporting a growth of 49.8percent YoY at Rs2.0bn. On account of lower other income and higher tax outgo, Adj. PAT for the quarter grew by 25.6percent YoY to Rs1.2bn (Forex MTM loss of Rs83m).”
 
“We expect better times ahead for MSSL, with the execution of new order book at SMR and improvement in margins at SMP over the next one year. At the CMP, the stock is trading 13.8x FY14E and 9.7x FY15E earnings, which in our view, is attractive, given the 42.0percent CAGR in earnings for FY12-FY15E. Hence, we maintain our .Accumulate. call on the stock with a SOTP-based target price of Rs221. (Standalone business at Rs178 based on 18x FY14E EPS + acquisitions valued at Rs43 based on 4x FY14E EV/EBITDA),” says Prabhudas Lilladher research report.

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