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Motherson Sumi shares trading 0.5% lower on BSE today
Motherson Sumi shares trading 0.5% lower on BSE today

Motherson Sumi shares: Emkay retains buy, upgrades target price

  • Motherson Sumi shares posted strong gains over the past two previous sessions

Many brokerages have upgraded Motherson Sumi shares after the auto-parts maker unveiled its Vision 2025 plan. The latest to upgrade the stock is Emkay Global, which has retained "buy" rating on Motherson Sumi with a revised target price of 155, from 139 earlier. Motherson Sumi shares today traded 0.5% lower at 145.75 after posting strong gains over the previous two sessions.

"At the analyst meet, Vision 2025 was emphasized with a target of $36 billion revenue and 40% ROCE vs. $9 billion revenue with a 24% adjusted ROCE in FY20. Including SAMIL, FY20 revenue stands at $10 billion. Factors supporting future growth include increasing content per vehicle, client additions, acquisitions and diversification toward non-auto segments," Emkay said in a note.

"Our positive view on Motherson Sumi is underpinned by its strong management capabilities and expectations of a gradual pick-up in underlying segments. FY20-23E EBITDA/earnings CAGRs are likely to be robust at 15%/28%. We retain Buy rating with a revised target price of 155 (Rs139 earlier), based on 20x FY23E EPS."

Motherson Sumi chairman Vivek Chaand Sehgal said on Monday that the government's production-linked incentive (PLI) scheme is "very exciting" and the amount of opportunities in India could even help the company achieve more than its 2025 target of $36 billion consolidated revenue.

"The PLI scheme that the government of India has announced is very exciting. Let's see what all we can do in that. India plays a vital role," chairman Vivek Chaand Sehgal told PTI.

Earlier this month, the government announced giving PLI to sectors such as auto, pharma, telecom, textile, food product and solar PV, providing 2 lakh crore worth production-linked incentives to 10 sectors to boost domestic manufacturing.

In its five-year plan, MSSL had set a target of achieving consolidated revenue of $36 billion with 75% coming from automotive sector and 25% from new divisions such aerospace, logistics and health and medical segments by FY25.

In the same report, Emkay notes that for Motherson Sumi "the business situation continues to improve with growth in underlying segments and a healthy order-book. Utilization levels have increased to 75%+ in 80% of global plants. The increase in content per vehicle continues, owing to higher electronic content/electrification, light-weighting and premiumization."

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