Buy Motherson Sumi Systems; target of Rs 139: Prabhudas Lilladher

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Prabhudas Lilladher's research report on Motherson Sumi Systems

MSS hosted virtual investor meet (click for PPT) where it highlighted SAMIL’s (a group company) key business, its scale up strategy and way forward. It explained the top 10 business of SAMIL (such as Automotive lightings, HVAC, structural metal parts, shock absorbers and entry in to aftermarket segment) which contribute to ~85% of revenues and ~89% of EBITDA for SAMIL (FY20 consol revenue/EBITDA contribution of 3.8%/6.4%). Post the restructuring, SAMIL would be included in one of the listed companies of MSS. In our view, while current contribution is small, business such as lighting (among top 3 suppliers in exterior Auto lightings), Suspension (large after market opportunity) and shift from cold stamp to hot stamp (for light weighting) will be a meaningful contributor in coming years for MSS. Also, it has potential of inorganic expansion (global opportunity size of ~USD200bn, refer exhibit 8).

Outlook

We maintain BUY with revised TP of Rs139 (vs Rs125) as we now value MSS at 20x (vs 18x) to factor in better than expected recovery in global auto volumes and tight control on debt.

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.

Read More