Motherson Sumi Systems Ltd - Result Update - Emkay

Reco: ACCUMULATE
CMP: Rs 174
Target Price: Rs 210

In line, Retain ACCUMULATE

- EBIDTA at Rs 2.6bn was in line (est. Rs 2.5bn). APAT at Rs 1.2bn was above est. of Rs 885mn due to lower tax rate. SMR reports 150bps QoQ margins expansion with higher utilization

- Peguform reports Sales/Adj. EBITDA/APAT of Rs11.5bn/Rs 43mn/ Rs -156mn for 38 days. Peguform to be EPS accretive but not assigning value due to limited information

- Concerns with Debt overdone. Net Debt (ex Peguform) is Rs 16bn (marginally up QoQ). Of the total gross debt of Rs 29bn of Peguform, debt attributable to MSSL is only Rs 11bn

- Retain ACCUMULATE with a TP of Rs 210. SMR margins to further improve with increase in utilization. Major benefit visible from 2QFY13.

Source : Equity Bulls

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