Motherson Sumi Systems Ltd. In a gestation phase, Retain ACCUMULATE ::Emkay

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Motherson Sumi Systems Ltd.

In a gestation phase, Retain ACCUMULATE

ACCUMULATE

CMP: Rs177                                        Target Price: Rs210

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n     Results abv. est. with Sales/EBITDA/APAT at Rs 23bn/ 2bn/ 986mn vs est. of Rs 22.7/1.9bn/806mn. However, SMR disappoints with adjusted margins at 3.3%

n     SMR margins to remain subdued as new Hungary plant is in gestation phase (utilization at <5%). Low utilization level to continue in H2FY12

n     Expect margin uptick with commencement of ~Euro 800mn order in FY13. Lower our FY12/13 EPS by 11%/1% to Rs 10.4/ Rs 15.5

n     Retain ACCUMULATE but lower our target multiple to 13.5x PER to factor in lower asset utilization and rising macro headwinds for demand