Motherson Sumi (MOSS.BO, Buy, PT Rs280, 46% upside) UBS: India Mid-Caps TOP PICKS - September 2011

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• A leading Indian auto parts maker evolving into a major global
supplier (26.0% EPS CAGR in FY11-13E)
–2009 acquisition of Visicorp (now SMR), market share gain,
and global presence
• Turnaround of SMR, margin improvement and new order flow -
c€800m of orders over the medium to long term. Expanding
content per car, new JVs and potential acquisitions
• Advantageous product portfolio of mirrors (55.5% of FY11
sales), wiring harnesses (30.4% of FY11 sales), and polymer
components provides potential to expand content per car
• High FY12 ROE of 28.5% driven by strong operations, capital
discipline (no capital raising in last 10 years except FCCB in FY06)
• Valuations expected to remain high driven by earnings
momentum rather than multiples re-rating
• Shareholding: promoters – 65%
• Valuation: DCF using UBS’s VCAM tool (assume a WACC of
13.1% and terminal sales growth of 2%). Implied FY13E PE of
17.7x

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