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Motherson Sumi Systems Ltd.
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US 5bn@2015-on track, Retain Accumulate
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ACCUMULATE
CMP: Rs231 Target Price: Rs260
n Peguform’s (PF) acquisition appears a strategic fit in terms of product, clients and geography
n SWS’ (25% equity in MSSL) resistance for 100% exposure in PF (non core business) could be the reason for 51:49 JV between MSSL and SMFL (parent of MSSL) to acquire PF
n Expect acquisition price to be ~Euro 235mn (3.5x CY10 EV/EVIDTA or 0.18x EV/Sales). SMR was acquired at 0.12x EV/Sales. Expect debt attributable to PF ~Euro150 to 200mn
n Acquisition can be EPS accretive from first year. Retain Accumulate rating
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