Buy Motherson Sumi Systems; target Rs 237: ICICIdirect.com
ICICIdirect.com is bullish on Motherson Sumi Systems and has recommended buy rating on the stock with a price target of Rs 237 in its research report dated August 1, 2013.
August 02, 2013 / 11:48 IST
ICICIdirect.com's report on Motherson Sumi Systems
"Motherson Sumi Systems (MSL) reported its Q1FY14 results, which were higher than our estimates on the margins front, as key subsidiaries SMR and SMP performed well. The consolidated topline at Rs 7082.6 crore (~11 percent YoY growth) came below our estimates as standalone sales grew only 1.7 percent YoY. Operating margins (adjusted for forex impact) came at 8.8 percent, up 30 bps sequentially as raw material costs declined and utilisation levels improved. Subsequently, PAT, adjusted for forex, came at Rs 242.5 crore, a 16 percent YoY jump. Adjusted for adverse forex movement, PAT was at ~Rs 161 crore. Significant growth was witnessed in SMR's performance, as the topline (£283 million) grew 22 percent YoY and margins expanded to 8.7 percent (370 bps YoY improvement) as major clients continued to perform well. Notable aspect of the quarterly result was that SMR's RoCE has increased to 28 percent from 14 percent last year. The business profile of MSL continues to grow stronger as it becomes a one-stop supplier for global clients. With utilisation levels improving and new carlines added, we expect revenues and margins to rise for SMR, SMP.""MSL's performance has been a bright spot in a very challenging operating environment. Both domestic and international businesses continue to show a robust performance, leading to improved return ratios. We continue to recommend BUY with a target price of Rs 237," says ICICIdirect.com research report.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. 
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