Motherson Sumi Systems Ltd. US 5bn@2015-on track, Accumulate:: Emkay

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Motherson Sumi Systems Ltd.

US 5bn@2015-on track, Retain Accumulate

ACCUMULATE

CMP: Rs231                                        Target Price: Rs260

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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