Accumulate Motherson Sumi Systems; target of Rs 373: Prabhudas Lilladher

Prabhudas Lilladher’s research report on Motherson Sumi Systems

Motherson Sumi Systems’ (MSS) Q4FY18 revenues came in at Rs154bn, up 36.5% YoY/ 7% QoQ (highest quarterly revenues), in-line with our estimates and with particularly strong growth in sales outside India (up 40% YoY to Rs132.8bn, forming ~87% of net sales). Operating performance too met our expectations wherein EBITDA grew ~20% YoY to Rs15bn and operating margins came in at 9.7%, up 100bps QoQ but lower 140bps YoY (PLe: 9.5%). With lower share of profit from JVs (down 43% YoY) offset by higher other income and lower tax rate, adjusted profit for the company stood at Rs5.3bn, above PLe of Rs4.9bn.

Outlook

We marginally tweak our numbers assuming higher depreciation provision on account of new plants and arrive at a target price of Rs373 (earlier Rs406), based upon 24x Mar’20E EPS.

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