Hold Motherson Sumi: target of Rs 225: ICICI Direct

ICICI Direct recommended hold rating on Motherson Sumi with a target price of Rs 225 in its research report dated February 16, 2021.

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ICICI Direct’s research report on Motherson Sumi

Motherson Sumi’s (MSSL) Q3FY21 results were strong across the board. Net consolidated sales (including domestic wiring harness, DWH) rose 17.7% YoY to Rs 18,440 crore (SMR up 1.9%, SMP up 4.6%). Margins came in at 10.8%, up 135 bps QoQ on operating leverage benefits amid flat gross margin performance. Sharp uptick in profitability at key subsidiary SMP (margins up 230 bps QoQ to 9.5%) was the key highlight. EBITDA for the quarter were at Rs 1994 crore with ensuing PAT at Rs 799 crore, up 195% YoY.

Outlook

We retain HOLD on the stock valuing it at Rs 225 (earlier Rs 165), 28x P/E on FY23E.

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