Prabhudas Lilladher's research report on Motherson Sumi Systems
MSS Q1FY21 consolidated performance missed expectations led by lower utilization impacting operating leverage. The company disclosed weaker than expected margins in key business such as SMP -8.3% (PLe -4%), SMR -2.8% (PLe +2%), PKC -4% (PLe +3%) and S/A at -26% (PLe 3%). However, from 2QFY21 the consol margins can turn positive at 4-5% based on improved plant utilization (~84% of plants have reached utilization of +50-75% as of July). Cost control led improvement in green field operations with EBITDA loss of Eur19mn (v/s cumulative loss of Eur175mn in FY20) aiding margins improvement at SMP. We cut FY21/22 EPS by 28%/6.5% while maintaining FY23 EPS.
Outlook
We maintain BUY with revised price target of Rs125 (Rs116) at 18x (unchanged) roll forwarded to Sep-22 EPS.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Read More
