Hold Motherson Sumi; target of Rs 450: ICICI Direct

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ICICI Direct's research report on Motherson Sumi

MSL’s European subsidiaries (SMR + SMP) posted a strong operating performance. EBITDA margins of SMR improved from >5% in FY12 to 10.9% in FY17 while SMP’s margins improved from 2% in FY12 to 7.3% in FY17. MSL may face some pressure on margins largely due to start-up cost in the medium term.

Outlook

MSL’s competence in turning around businesses is evident from the success of SMR and SMP. The management’s strong focus on RoCE augurs well for its performance. We remain positive on the long term perspective. We value MSL on an SOTP basis with a target price of Rs 450 and maintain HOLD recommendation on the stock.

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