CLSA initiates coverage on Motherson Sumi with Buy rating

CLSA has initiated coverage on Motherson Sumi Systems Limited with a 'Buy' rating. CLSA has projected a target price of Rs.235, giving an upside of 22% from the current market price of Rs.192.35.

CLSA has said in its report that Motherson Sumi's track record to focus on growth has delivered results with sales & profits growing at over 30% CAGR in the past decade. The focus on international acquisitions recently has leveraged its balance sheet, but provides opportunity to leapfrog revenue and growth.

The Peguform acquisition has showed signs of margin progress and CLSA expects net profit to become 3.5x over FY12-15. CLSA expects Peguform to deliver Rs.7 billion of incremental EBITDA over FY12-14.

Source : Equity Bulls

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