Buy Motherson Sumi; target of Rs 442: Axis Direct

Axis Direct's research report on Motherson Sumi

Q3 was below estimates on weaker-than-expected EBITDA margin largely due to plant start-up costs. Standalone and SMR# revenue growth was below estimates, while SMP^ and PKC growth beat estimates. Consolidated EBITDA margin was a slight miss across operations, resulting in overall EBITDA miss of ~4%.

Outlook

We lower FY19 estimate by 7% (margin-led) and keep FY20 estimate unchanged. We roll forward to FY20 and reiterate BUY with TP of Rs 442 (23x FY20E P/E) vs. Rs 403 earlier. For all recommendations report, click here

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