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Last Updated : Jun 12, 2019 03:55 PM IST | Source: Moneycontrol.com

Buy Motherson Sumi; target of Rs 144: Motilal Oswal

Motilal Oswal is bullish on Motherson Sumi has recommended buy rating on the stock with a target price of Rs 144 in its research report dated June 11, 2019.

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Motilal Oswal's research report on Motherson Sumi


While underlying automotive trends are not supportive, MSS has been impacted by ramp-up issues at its recently commissioned plants (particularly the Tuscaloosa plant). These issues are transient in nature, partly due (a) teething trouble for the large greenfield plant and (b) visa-related issues. We expect a strong recovery as these plants drive growth based on orders on hand. MSS in on right side of global megatrends in the automotive industry, which will drive a further increase in content. This, coupled with disciplined capital allocation toward value-accretive acquisitions, would add to the organic growth potential.


Outlook


However, the EU business should see favorable base from Sep'19 onwards, stabilization of green-field plants, execution of strong order book, limited capex at SMPBV, and the India business benefitting from content increase in BS6. Valuations are at 20.1x/16.4x FY20E/FY21E consol. EPS. Maintain Buy with TP of INR144 (~20x Mar'21 Consol. EPS, a ~20% discount to LPA).


For all recommendations report, click here


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First Published on Jun 12, 2019 03:55 pm
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