Wed, Dec 26, 2012 at 12:14
Buy Motherson Sumi; target of Rs 227: Firstcall Research
Firstcall Research is bullish on Motherson Sumi and has recommended buy rating on the stock with a target of Rs 227 in its December 24, 2012 research report.
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“The flagship company of the Samvardhana Motherson Group, Motherson Sumi Systems Limited (MSSL) is a joint venture between Samvardhana Motherson Finance Limited, India and Sumitomo Wiring Systems, Ltd., Japan. Motherson Sumi Systems (MSSL) is engaged in manufacturing a range of products from single circuit lead wire to complex cabin harnesses and from small harnesses to harnesses for large cranes and elevators. Incorporated in 1986. The company’s manufacturing units are located at Noida, Pune, Tapukara, Pathredi, Kandala, Nashik, Lucknow, Jamshedpur, Haldwani, Chennai, Puducherry and Bangalore. the Company has presence in over 25 countries with over 124 manufacturing facilities MSSL has received certifications namely ISO/TS 16949:2002 for quality management system and ISO 14001:2004 environmental management system, ISO 9001:2008. MSSL also supplies wiring harnesses to material handling, earth moving and farm equipment, white goods & electronics, elevators, office automation and medical equipment industries.”
“The company also has manufacturing bases located at Sharjah, UAE and UK. MSSL supplies its products to overseas markets such as Asia, Middle East, Europe and USA. MSSL is the largest manufacturer of wiring harnesses in India. MSSL has decided to acquire Visiocorp Plc of the UK, a global leader in the rear-view mirror business. Due to this acquisition the company will get access to Visiocorp's global OEM customers such as Daimler, VW, Nissan and Renault, General Motors and Ford.”
“The flagship company of the Samvardhana Motherson Group, Motherson Sumi Systems Limited (MSSL) is a joint venture between Samvardhana Motherson Finance Limited, India and Sumitomo Wiring Systems, Ltd., Japan, reported its financial results for the quarter ended 30 Sep, 2012. The Second quarter witnesses a healthy increase in overall sales as well as profitability on account of domestic volumes and sales to customers outside India grew by healthy 18% and 235%. The company’s net profit springs up to Rs.1375.80 million against Rs.242.60 million in the corresponding quarter ending of previous year, an increase of 467.11%. Revenue for the quarter stands up by 151.88% to Rs.58905.20 million from Rs.23386.50 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.3.51 a share during the quarter, registering at 460.60% increase over previous year period. Profit before interest, depreciation and tax is Rs.4813.80 millions as against Rs.1325.50 millions in the corresponding period of the previous year.”
“At the current market price of Rs.201.20, the stock P/E ratio is at 26.01 x FY13E and 22.36 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.7.73 and Rs.9.00 respectively. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 57% and 29% over 2011 to 2014E respectively. Price to Book Value of the stock is expected to be at 3.64 x and 3.13 x respectively for FY13E and FY14E. The second quarter witnesses a healthy increase in overall sales as well as profitability on account of acquisition of 80% stake in Peguform GmbH and Peguform Iberica, SL including subsidiaries and joint ventures together with 50% stake in Wethje Entwicklungs, GmbH and Wethje Carbon Composite, GmbH. The Company and Samvardhana Motherson Finance Limited hold directly or indirectly 51% and 49% respectively in SMPL and SMGHL under joint venture agreements. We recommend ‘BUY’ in this particular scrip with a target price of Rs 227 for medium to long term investment,” says Firstcall Research report.
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