{"id":1399,"date":"2019-11-18T02:25:47","date_gmt":"2019-11-18T02:25:47","guid":{"rendered":"https:\/\/jobbinghood.com\/finance\/2019\/11\/18\/stock-corner-buy-on-motherson-sumi-q2-results-were-ahead-of-estimates\/"},"modified":"2019-11-18T02:25:47","modified_gmt":"2019-11-18T02:25:47","slug":"stock-corner-buy-on-motherson-sumi-q2-results-were-ahead-of-estimates","status":"publish","type":"post","link":"https:\/\/jobbinghood.com\/magazine\/2019\/11\/18\/stock-corner-buy-on-motherson-sumi-q2-results-were-ahead-of-estimates\/","title":{"rendered":"Stock corner: &#8216;Buy&#8217; on Motherson Sumi, Q2 results were ahead of estimates"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<div class=\"article-image\">\n<figure><img fetchpriority=\"high\" decoding=\"async\" class=\"lazy lazy-hidden wp-image-1767338 size-full\" src=\"http:\/\/www.financialexpress.com\/wp-content\/plugins\/a3-lazy-load\/assets\/images\/lazy_placeholder.gif\" data-lazy-type=\"image\" data-src=\"https:\/\/images.financialexpress.com\/2019\/11\/Motherson-Sumi-Inv1-1.jpg\" alt=\"Stock corner, Buy, Motherson Sumi, Q2 result,\u00a0Motherson sumi, Motherson sumi system limited, Motherson sumi noida, Motherson company, Motherson share price, Motherson sumi infotech, Motherson sumi news, Motherson sumi systems\" width=\"660\" height=\"440\" srcset=\"\" data-srcset=\"https:\/\/images.financialexpress.com\/2019\/11\/Motherson-Sumi-Inv1-1.jpg 660w, https:\/\/images.financialexpress.com\/2019\/11\/Motherson-Sumi-Inv1-1-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2019\/11\/Motherson-Sumi-Inv1-1-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2019\/11\/Motherson-Sumi-Inv1-1-401x267.jpg 401w\" sizes=\"(max-width: 660px) 100vw, 660px\"\/><noscript><img decoding=\"async\" class=\"wp-image-1767338 size-full\" src=\"https:\/\/images.financialexpress.com\/2019\/11\/Motherson-Sumi-Inv1-1.jpg\" alt=\"Stock corner, Buy, Motherson Sumi, Q2 result,\u00a0Motherson sumi, Motherson sumi system limited, Motherson sumi noida, Motherson company, Motherson share price, Motherson sumi infotech, Motherson sumi news, Motherson sumi systems\" width=\"660\" height=\"440\" srcset=\"https:\/\/images.financialexpress.com\/2019\/11\/Motherson-Sumi-Inv1-1.jpg 660w, https:\/\/images.financialexpress.com\/2019\/11\/Motherson-Sumi-Inv1-1-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2019\/11\/Motherson-Sumi-Inv1-1-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2019\/11\/Motherson-Sumi-Inv1-1-401x267.jpg 401w\" sizes=\"(max-width: 660px) 100vw, 660px\"\/><\/noscript><span class=\"article-caption\">Standalone revenue declined 17% y-o-y due to weak OE production; however, other subsidiaries reported modest growth\u2013revenue up 2.4% for SMR, 12% for PKC and 20% for SMP.<\/span><\/figure>\n<\/div>\n<p>Q2Fy20 consolidated Ebitda at Rs 13.2 bn (margin 8.3%) was ~6% higher than Nomura (margin 7.8%) and 9% higher than consensus (margin 7.4%). While standalone Ebitda margins disappointed at 15.1% (Nom 16.7%), other subsidiaries surprised positively (SMP 3.6%; SMR 11.1%; PKC 11.7%).<\/p>\n<p>&gt; Standalone revenue declined 17% y-o-y due to weak OE production; however, other subsidiaries reported modest growth\u2013revenue up 2.4% for SMR, 12% for PKC and 20% for SMP.<\/p>\n<p>&gt; Given the steep slowdown in the PV industry, we now factor in 4% y-o-y revenue decline for the standalone business in FY20F (2% earlier). Management indicated content per vehicle can jump in double digits under BS-6; hence, we expect revenue growth to improve to ~14%\/17% y-o-y in FY21F\/22F, also as industry recovers.<\/p>\n<p>&gt; We maintain SMP\u2019s revenue CAGR at ~5% for FY20-22F, as new plants ramp up. SMP\u2019s margin (ex-SMRC and new plants) was at 9.8% in Q2FY20 (up 120bps q-o-q\/50 bps y-o-y). Hence, as new plants turn around, we expect overall SMP margins to touch ~8% in FY22F (7.5% earlier).<\/p>\n<p>&gt; Overall, our Ebitda is largely unchanged in FY20\/21F but revised up by 4% in FY22F. However, our EPS is revised up by 5%\/ 8%\/16% over FY20-22F to factor in lower tax rate of 25% in India business.<\/p>\n<p>&gt; MSS\u2019 capex cycle is largely over in FY19, and we expect healthy Rs 16 bn\/22 bn of FCF in FY20-21F. This implies 4%\/5% FCF yields in FY20-21F, which is attractive.<\/p>\n<p><strong>Valuation:<\/strong> The stock currently trades at ~19.7x FY21F EPS of Rs 6.8. We raise our TP to Rs 158 (Rs 131 earlier) based on target P\/E of 20x on FY22F EPS, discounted to Sep-20F (Jul-20F earlier).<\/p>\n<p>\u00a0<\/p>\n<div class=\"common-bottom-text\">\n<p>Get live <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">Stock Prices<\/a> from BSE and NSE and latest NAV, portfolio of <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Mutual Funds<\/a>, calculate your tax by <a href=\"https:\/\/www.financialexpress.com\/income-tax-calculator\/\" target=\"_blank\" rel=\"noopener noreferrer\">Income Tax Calculator<\/a>, know market\u2019s <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-gainers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Gainers<\/a>, <a href=\"http:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-losers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Losers<\/a> &amp; <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/equity-funds\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Equity Funds<\/a>. Like us on <a href=\" https:\/\/www.facebook.com\/thefinancialexpress\" target=\"_blank\" rel=\"noopener noreferrer\">Facebook<\/a> and follow us on <a href=\" https:\/\/twitter.com\/FinancialXpress\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a>.<\/p>\n<\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>[ad_2]<br \/><\/p>\n<div class=\"jobbi-after-content-jh-placement jobbi-entity-placement\" id=\"jobbi-2027568331\"><div id=\"jobbi-3880914434\"><script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-5862940809620110\" crossorigin=\"anonymous\"><\/script><ins class=\"adsbygoogle\" style=\"display:block;\" data-ad-client=\"ca-pub-5862940809620110\" \ndata-ad-slot=\"\" \ndata-ad-format=\"auto\"><\/ins>\n<script> \n(adsbygoogle = window.adsbygoogle || []).push({}); \n<\/script>\n<\/div><\/div>","protected":false},"excerpt":{"rendered":"<p>[ad_1] Standalone revenue declined 17% y-o-y due to weak OE production; however, other subsidiaries reported modest growth\u2013revenue up 2.4% for SMR, 12% for PKC and 20% for SMP. Q2Fy20 consolidated Ebitda at Rs 13.2 bn (margin 8.3%) was ~6% higher than Nomura (margin 7.8%) and 9% higher than consensus (margin 7.4%). While standalone Ebitda margins [&hellip;]<\/p>\n","protected":false},"author":348,"featured_media":1400,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1399","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets"],"_links":{"self":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts\/1399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/users\/348"}],"replies":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/comments?post=1399"}],"version-history":[{"count":0,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts\/1399\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/media\/1400"}],"wp:attachment":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/media?parent=1399"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/categories?post=1399"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/tags?post=1399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}