Buy Motherson Sumi Systems; target of Rs 147: Prabhudas Lilladher

Prabhudas Lilladher's research report on Motherson Sumi Systems

MSS 2QFY21 consol operating performance was better helped by improved plant utilizations globally along with cost efficiencies. EBITDA grew 15% YoY to Rs13.9bn (PLe Rs11.9bn) with 9.3% margins (PLe 7.6%, +140bp YoY). We expect margins to sustain at ~9% even in 2HFY21 led by improving performance at green field (~15% of SMP) and cost efficiencies. SMRP BV order book too remains healthy at Eur13.1bn (with Eur1.7bn new orders in 1HFY21), where management indicated no major order cancellation by OEMs.

Outlook

We upgrade FY22/23 consol EPS by 6.7%/4.5% to factor in cost efficiencies. We maintain BUY with revised price target of Rs147 (earlier Rs139).

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