Shares of auto component manufacturer Motherson Sumi Systems today surged 5% to ?146.30 amid a recovery in global automotive industry. The auto parts maker recently outlined its Vision 2025 plan that focuses on expanding into nascent geographies, new technologies in current products and addressing the broader mobility space (beyond PVs).
“While organic growth would be broadly driven by content increase through new technologies and expansion into new markets and segments, inorganic growth would play an important part in attaining its strategic objectives in the Auto business and ramp-up in new industries (Aerospace and Health/Medical Technologies),” domestic brokerage Motilal Oswal said in a note.
“Vision 2025, along with ongoing restructuring of the group, will help the company shape up for the next phase of growth. We believe Motherson Sumi Systems is the best proxy to a global automotive recovery, which is supplemented by company-specific drivers of earnings,” Motilal Oswal said in note. It has buy recommendation on the Motherson Sumi shares with target price of ?160.
Another brokerage JM Financial said: “Motherson Sumi Systems (MSSL) recently held its investor meet to share its Vision 2025. The company has set an ambitious target of achieving $36 billion in revenue by FY25 and laid-out plans to achieve it through organic/inorganic growth and 25% contribution from non-automotive businesses.”
“As part of Vision 2025, Motherson Sumi Systems will be expanding into new divisions like medical, aerospace, logistics and IT. In the automotive business, MSSL is targeting $27 billion by FY25 (vs. USD 10 billion in FY20) driven by higher content/vehicle, new technology products / customers, entry into new segments/markets and inorganic growth,” it added.
JM Financial has a “buy” recommendation on the stock with price target of ?150.
Motherson Sumi shares have rebounded strongly from their 52-week lows of ?48.50, hit in March this year.
Earlier this month, the auto component manufacturer had reported a 2.7% rise in consolidated net profit at ?387.93 crore for the second quarter ended September 30. The company had posted a net profit of ?377.73 crore in the July-September period of previous fiscal.
Total revenue from operations, however, declined to ?14,957.21 crore during the quarter under review as against ?15,259.74 crore in the year-ago period, Motherson Sumi Systems Ltd (MSSL) said in a statement.
The company said that around 80 per cent of its facilities are running at over 75 per cent capacity, indicating that things have come back to near normal.
“Global automotive industry is on a path to recovery in the post COVID world. We are seeing a surge in demand across the globe. Our teams are geared up to fulfil the demands of our customers,” MSSL Chairman Vivek Chaand Sehgal said.
The company believes that strong traction will continue to be there in the upcoming quarters, he added.
News Source:- Livemint