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Motherson Sumi Systems gains 2% as Samvardhana buys MS Global India, IIFL ups target sharply

January 05
22:06 2018
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Motherson Sumi Systems shares gained more than 2 percent intraday Friday after the promoter company acquired MS Global India and research house IIFL upped its target price on the stock sharply to Rs 450 from Rs 300 earlier.

Samvardhana Motherson International (SAMIL), the promoter of Motherson Sumi Systems and the principal holding company of auto component supplier Samvardhana Motherson Group, on Thursday said it has acquired 100 percent of MS Global India Pvt Ltd from its Korea parent company MS Group.

“The acquisition of MS Global India will see SAMIL enter a new vertical – sheet metal parts with focus on hot stamping – a light weighting technology for high strength sheet metal parts. This technology augurs well towards the trend of light weighting of vehicles and will also find increased use in electronic vehicles,” the company said in its statement.

MSGI is a Rs 3,500-crore company and through its manufacturing plant in Chennai, it supplies auto components, including frames for chassis for commercial vehicles.

“We believe that there are many synergies at play, most important being, it increases our offerings in terms of content per car, as these parts are used in both passenger and commercial vehicles,” VC Sehgal, Group Chairman said.

Meanwhile, research house IIFL has maintained its Buy rating on the stock with increased price target at Rs 450 from Rs 300 per share earlier.

Motherson is a global giant built on sound operating and financial principles. History of value creation through acquisitions offers sizeable upside risk, the research house said.

It feels the pickup in autos will drive acceleration in Motherson’s growth. Increase in content per vehicle is a key growth driver, it said.

It expects good mix of business with steady growth and turnaround potential to drive earnings. It also expects revenue, operating income and earnings per share to grow at a compounded rate of 16 percent, 16 percent and 28 percent respectively over the financial years through March 2020.

At 12:42 hours IST, the stock price was quoting at Rs 383.20, up Rs 7.70, or 2.05 percent on the BSE.

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