Prabhudas Lilladher's research report on Motherson Sumi Systems
MSS board approved the proposed demerger of domestic wiring harness (DWH – 57.4%/6.2% of Standalone/Consol revenues), that will be listed with mirror shareholding (likely by July-21). The board also approved merger of SAMIL (the principal holding co) into MSSL. This reorganization will now create two listed entities – (a) the India wiring harness business, and (b) global businesses and other India businesses. While we believe that it would at least take a year to be effective, in the long run separation of India/global business would increase focus in many inorganic opportunities too. This will also drive better value discovery for global businesses.
Outlook
We maintain BUY with TP of Rs116 (unchanged at 18x consol EPS).
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