What should investors do with Motherson Sumi post Q4 results: Buy, sell or hold?

Motherson Sumi Systems share price touched a 52-week high of Rs 269 at open on June 3, but soon declined 4 percent a day after the company announced it earnings.

The company reported  a net profit of Rs 713.62 crore in the quarter ended March 2021 against Rs 183.38 crore in the year-ago period. Its revenue rose 17.57 percent to Rs 16,971.91 crore against Rs 14,434.48 crore YoY.

Earnings before interest, tax, depreciation and amortization (EBITDA) rose 38.7% to Rs 1,722 crore versus Rs 1,242 crore in Q4 FY20 and margin was at 10.1% versus 8.6% in year-ago.

Also Read - Motherson Sumi Systems posts nearly eight-fold jump in Q4 profit at Rs 1,018.69 crore

Here is what brokerages have to say about the stock and the company after the March quarter earnings:

Nomura | Rating: Downgrade to neutral | Target: Raised to Rs 301

The steady performance will likely to continue. The near-term catalysts were played out, while long-term still positive. The EV order book mix further improved to 25% for SMRPBV and profitability will continue to rise further as EVs likely gain share.

Goldman Sachs | Rating: Buy | Target: Rs 236

The Q4 consolidated revenue was in-line, while EBITDA was 5% lower than estimates. Operationally, numbers remained below estimate, while it is beat the expectations on order wins & cash flow generation. There was a sharp improvement in its net debt position.

CLSA | Rating: Downgrade to outperform | Target: Rs 290

It was a strong Q4, but likely in the price. CLSA increases FY22/23 EPS estimates by 2-3%. Remain constructive on medium-term revenue & margin trajectory, while current valuations limit upside potential.

Jefferies | Rating: Downgrade to underperform | Target: Rs 205

The Q4 EBITDA was 9% below estimates. The margin contracted 30-150 bps QoQ across business. The operational outlook is good with expectations of cyclical recovery. The stock is trading at 34x/28x FY22e/FY23e PE versus historical average of 20x.

Motilal Oswal | Rating: Buy | Target: Rs 300

Our positive view on stock remains intact (cyclical recovery + turnaround in the greenfield plant + execution of a strong order book of SMRPBV).

The stock trades at 30.9x/23x FY22E/FY23E consolidated EPS. We have increased our target P/E multiple for SMRPBV and PKC to 23x (v/s 20x earlier) due to improved visibility of a sustained recovery.

Prabhudas Lilladher | Rating: Buy | Target: Rs 311

We expect deleveraging to continue for organic business as strong order book at SMRPBV doesn’t entail any significant capex. We upgrade FY22/23 consolidated EPS by 15.5%/11.5% to factor in strong order wins at SMRP BV.

At 09:21 hrs Motherson Sumi Systems was quoting at Rs 258.45, down Rs 10.65, or 3.96 percent on the BSE.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.