Buy Motherson Sumi Systems; target of Rs 165: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Motherson Sumi Systems has recommended buy rating on the stock with a target price of Rs 165 in its research report dated November 23, 2020.

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December 05, 2020 / 12:59 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Motherson Sumi Systems

MSS hosted a virtual investor meet (Link for PPT) outlining key strategies to achieve for their vision 2025 targets. These include 1) Consol revenues at USD36bn 2) 3CX10 (no country/component/customer contribute >10% in topline) 3) 25% revenue from non-auto and 4) 40% of consol profit as dividend. In its sixth five-year plan (2020-2025), MSS is aggressive in targeting ~25% revenue from non-auto verticals such as Aerospace, Health care, IT and Logistics which are likely key enablers of USD9bn revenues (both organic and inorganic). In our view, their target of USD36bn revenue by 2025 (v/s ~USD9bn in FY20) is aggressive and it will be pre-loaded by acquisitions both in auto and non-auto segment. It has hinted on several mid/large scale opportunities available in auto/non-auto space globally. While we remain constructive on MSS ability in automotive segment, growth in unchartered non-auto verticals (backed by wiring harness) is already seen.

Outlook

We maintain BUY with revised TP of Rs165 (vs Rs147) at 20x Mar-23 consol EPS (v/s Sep-22), with unchanged earnings. Inorganic opportunities and growth in non-auto space remain key rating catalyst going forward.For all recommendations report, click here

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