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    Nomura maintains buy on Motherson Sumi, raises target price to Rs 158

    Synopsis

    Buy Motherson Sumi Systems Ltd. at a price target of Rs 158.0 .

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    Nomura has maintained buy rating on Motherson Sumi Systems in the long term and raised target price to Rs 158 from Rs 131. Shares of Motherson Sumi Systems ended up 4.1% at Rs 134.6 on Monday while BSE sensex closed 21.47 points up to 40,345.08.

    Company Financials

    For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 15708.99 crore, down -5.12% from last quarter sales of Rs 16557.33 crore and up 5.76% from last year same quarter sales of Rs 14853.55 crore. The company has reported net profit after tax of Rs 434.16 crore in the latest quarter.

    Investment Rationale


    The company's capital expenditure cycle is largely over in FY19 and healthy free cash flow is expected in FY20 and FY21, the brokerage said. Motherson Sumi is a play on strong volume growth expected in India's passenger vehicle industry and rising content per car, said Nomura. Globally, rising polymer usage and advanced mirror technology should continue to drive new order wins, said Nomura. New global commercial vehicle wiring harness opportunity with PKC's acquisition aids growth visibility, it said.
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