27 May 2019
4QFY19 Results Update | Sector: Automobiles
Motherson Sumi
Buy
BSE SENSEX
36,683
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
S&P CNX
11,925
MSS IN
Misses expectations; new plants ramp-up cost hurts SMP EBITDA margin
3,158
Consol. revenue grew 11.4% YoY to INR172b (in-line),
driven by SMP (+18
366.8 / 5.3
YoY in EUR terms, led by contribution from greenfield plants and Reydel
218 / 114
consolidation), SMR (+4% YoY) and PKC (+14% YoY). However, S/A revenue
-21/-38/-58
1183
declined 12% YoY owing to slowdown in the domestic auto industry and the
38.3
lagged impact of copper price pass-through.
CMP: INR116
TP: INR144(+24%)
Financials & Valuations (INR b)
2019 2020E
Y/E Mar
Net Sales
635.2
709.3
EBITDA
53.5
61.6
PAT
16.1
18.6
EPS (INR)
5.1
5.9
Gr. (%)
-5.2
15.2
BV/Sh (INR)
35.7
36.9
RoE (%)
15.7
16.2
RoCE (%)
9.8
10.4
P/E (x)
22.7
19.7
P/BV (x)
3.3
3.1
EV/EBITDA (x)
8.2
7.2
2021E
771.1
76.5
22.7
7.2
21.9
41.8
18.2
12.9
16.2
2.8
5.3
Estimate change
TP change
Rating change
Consol. EBITDA margin misses estimate due to weak SMP margins:
EBITDA
declined 17.2% YoY to INR12.4b (our estimate: INR15.7b). EBITDA margin
shrank 250bp YoY (-120bp QoQ) to 7.2% (our estimate: 9.4%) due to (a)
lower SMP margin (-700bp YoY, -350bp QoQ to 1.9%; our estimate: 6.2%) on
account of ramp-up cost related to greenfield capacities and SMRC
consolidation and (b) 40bp YoY contraction in S/A margin. Adj. PAT declined
23% YoY to INR4b (our estimate: INR4.6b). For FY19, revenue/EBITDA grew
13%/4% YoY, while PAT declined 5% YoY.
Key takeaways from the call:
(a) Expect normalization in SMP margin in 2-3
quarters once new product launches come through. (b) No change in
orders/order book due to uncertain market conditions. (c) SMRPBV order
book stood at EUR18.2b (including ~EUR2.3b order book of Reydel). (d)
Greenfield capacity utilization: Kecskemet - ~60%, Tuscaloosa - 40-45%. (e)
Consol. capex to be at INR20-22b in FY20. SMRPBV capex at EUR200m.
Valuation and view:
We cut consol. FY20/21 EPS by 15%/7% to factor in the
likely ramp-up cost impact until 1HFY20 and the weak volume outlook for
India and PKC. However, the EU business will likely benefit from a favorable
base from Sep’19. This, coupled with the execution of strong order book and
limited capex at SMPBV and the benefit to India business from content
increase in BS6, augurs well for MSS. The stock trades at 19.7x/16.2x
FY20E/21E consol. EPS. Maintain
Buy
with a target price of INR144 (~20x
Mar’21 consol. EPS, which is at ~20% discount to 10-year average).
FY19
FY18
2Q
3Q
4Q
151,050 164,730 171,695 562,933
12.6
14.5
11.4
32.8
57.9
57.7
58.1
61.0
21.7
22.5
23.0
60.6
11.8
11.3
11.6
10.3
13,001 13,934 12,428 51,226
8.6
8.5
7.2
9.1
4,879 5,714 5,518 15,752
1,315
882 1,030
4,108
463
610
682
1,701
7,269 7,948 6,562 33,067
35.4
33.9
37.8
30.5
982 1,365
-17
5,249
3,711 3,891 4,100 17,024
-15.6
6.3
-23.1
10.2
(INR Million)
FY19 FY19E
Var.
4QE
(%)
635,229 167,319
2.6
12.8
8.6
57.8
57.0
110bp
22.3
21.6
140bp
11.4
12.0
-30bp
53,484 15,728
-21.0
8.4
9.4
-220bp
20,582
5,803
4,232
1,060
2,202
230
30,872
9,095
-27.9
35.7
34.6
320bp
3,719
1,389
16,132
4,556
-10.0
-5.2
-14.6
Quarterly performance (Cons.)
Y/E March
Net Sales
YoY Change (%)
RM Cost (% of sales)
Staff Cost (% of sales)
Other Exp (% of sales)
EBITDA
Margins (%)
Depreciation
Interest
Other income
PBT before EO expense
Tax Rate (%)
Min. Int & Share of profit
Adj PAT
YoY Change (%)
1Q
130,774
25.1
61.1
19.7
10.5
11,352
8.7
3,768
1,176
551
6,959
33.7
335
3,637
20.2
FY18
2Q
3Q
4Q
134,204 143,877 154,078
32.4
35.7
36.9
60.6
61.5
60.6
19.8
19.5
19.6
10.4
10.3
10.1
12,284 12,493 15,001
9.2
8.7
9.7
3,978 3,937
4,069
771 1,032
1,130
379
253
615
7,914 7,777 10,418
29.5
32.4
27.6
1,168 1,595
2,151
4,396 3,659
5,332
21.8
-12.0
1.3
1Q
147,755
13.0
57.6
21.9
11.0
14,121
9.6
4,471
1,005
447
9,093
36.0
1,389
4,431
21.8
Jinesh Gandhi – Research Analyst
(Jinesh@MotilalOswal.com); +91 22 6129 1524
Deep A Shah – Research Analyst
(Deep.S@MotilalOswal.com); +91 22 6129 1533
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
 Motilal Oswal Financial Services
Motherson Sumi
S/A business impacted by slowdown in domestic auto industry
Implementation of Ind-AS 115 had impact of INR940m on revenues. Revenues
declined 12.1% YoY (+7% QoQ) to INR18.5b (est. INR18.3b) as domestic sales
declined 15.4% YoY while exports increased 7.9% YoY. The decline in S/A
business was led by slowdown in domestic auto industry.
Gross margins declined 60bp YoY (80bp QoQ) to 43.8% (est. 44.5%).
EBITDA declined 14% YoY (+30.5% QoQ) to INR3.35b (est. INR2.9b) resulting in
EBITDA margin of 18.1% (est. 15.8%) which declined 40bp YoY (+320bp QoQ).
Higher tax at 34% (est. 31.2%) dragged adj. PAT to INR2.1b (est. INR1.6b), which
declined 13% YoY (+49% QoQ).
Exhibit 2: Standalone EBITDA and EBITDA margins
Standalone EBITDA (INR m)
17.9
-3.6
-12.1
19.6
21.0
18.3
20.0
19.4
19.6
EBITDA Margin (%)
18.5
18.1
14.9
Exhibit 1: Trend in standalone revenues and growth
Standalone Revenue (INR m)
9.6
-1.9
18.3
2.0
14.0
23.3
21.0
Growth %
21.9
16.5
15.1
13.9
18.2
17.0
7.5
20.8
16.8
17.1
17.6
18.3
16.1
Source: Company, MOFSL
Source: Company, MOFSL
SMP – ramp-up cost of greenfield plants impacts margins (1.9% v/s est.
6.2%)
SMP’s revenue in EUR terms grew 17.7% YoY to EUR1.05b (v/s est. EUR996m).
This was due to weak demand due to WLTP.
EBITDA Margins at SMP declined 700bp YoY (-350bp QoQ) to 1.9% (est. 6.2%)
impacted by ramp up costs related to greenfield capacities and SMRC
consolidation. However, excluding above impact SMP’s EBITDA margin came in
at 8.5% (v/s 9.3% in 4QFY18).
Exhibit 4: SMP EBITDA and EBITDA margins
EBITDA Margin (%)
8.9
8.4
8.1
7.8 7.6
6.7 6.2 6.7 6.9 6.5 6.9
6.7
6.2
5.7
5.4
1.9
SMP EBITDA (INR m)
Exhibit 3: Trend in SMP revenues and growth
SMP Revenue (INR m)
18.9
13.2
5.5
7.0
21.4
15.7
16.0
8.7
10.7
20.0
Growth %
24.0 22.5
19.419.1
12.2
4.6
Source: Company, MOFSL
Source: Company, MOFSL
27 May 2019
2
 Motilal Oswal Financial Services
Motherson Sumi
SMP - Highlights from the earnings call
WLPT regulations and weak demand had impact on the SMP business, resulting
in weak revenue in 4QFY19.
No impact of cut down in Daimler guidance in existing orders.
No change/cancellation in orders/order book due to uncertain market
conditions.
Expect normalization in margins in 2-3 quarters once new product launch phase
comes through.
SMRPBV’s order book stood at EUR18.2b (including ~EUR2.3b order book of
Reydel).
In the last cycle to execute legacy orders at SMP, which typically has order life
cycle of 7-9 years.
Greenfield capacity utilization: Kecskemet - ~60%,Tuscaloosa - 40-45%
SMR – margins below estimates at 11.6% (est. 12.8%)
SMR revenue in EUR terms grew 3.9% YoY (+6% QoQ) to EUR422m (est.
EUR414m).
EBITDA margin shrank 140bp YoY (flat QoQ) to 11.6% (est. 12.8%).
Exhibit 6: SMR EBITDA and EBITDA margins
Growth %
13.6
7.2
8.5 9.5
5.2
8.5
9.6
11.1
SMR EBITDA (INR m)
13.4
9.1 9.3
EBITDA Margin (%)
13.1
12.1
12.0
11.3
11.310.6
11.211.111.611.6
Exhibit 5: SMR revenues and growth
SMR Revenue (INR m)
14.6
4.3
1.9 3.1 2.2
15.7 15.3
9.9
0.3
1.9 1.1
Source: Company, MOFSL
Source: Company, MOFSL
PKC – EBITDA margins in line at 8.6%
PKC revenue in EUR terms increased by 14.2% YoY (+7.5% QoQ) to EUR314m
(est. EUR294m) as healthy growth in North American revenues was partially
negated by muted sales in China.
EBITDA margin expanded by 240bp YoY (flat QoQ) at 8.6% (in-line).
Lower interest (due to maturity of high cost bonds in Sep-18) helped PBT more
than doubled to EUR20m and PAT increased 2.6x YoY to EUR18m.
27 May 2019
3
 Motilal Oswal Financial Services
Motherson Sumi
Exhibit 7: PKC revenues and growth
Revenue (INR m)
43.3
33.3
23.9
8.3
18,029 18,434 20,656 21,744 23,621 22,345 24,005 25,133
1,460
1,360
1,296
1,344
2,234
1,957
2,055
2,161
31.0
21.2
16.2
15.6
Growth %
8.1
7.4
Exhibit 8: PKC EBITDA and EBITDA margins
EBITDA (INR m)
9.5
EBITDA (%)
8.8
8.6
8.6
6.3
6.2
Source: Company, MOFSL
Source: Company, MOFSL
Other highlights from the earnings call
Expect overall capex to be at INR20-22b in FY20 with SMRPBV capex at
EUR200m.
Expect capex intensity be lower with commencement of new plants at SMP.
S/A: In addition to PV, also supply to PV and 2W segments in domestic market.
S/A: Expect to commence new plant from 4QFY19 in India.
Valuation and view
On right side of global automotive megatrends:
The global automotive industry
is at the cusp of disruption, led by megatrends in the form of (a) EVs, (b) connect
cars, (c) autonomous cars, (d) shared mobility, (e) stricter emission norms, and
(f) platform and vendor consolidation. These trends have the potential to
disrupt the automotive supply chain and challenge incumbents. We believe,
with its diverse product base and market presence, MSS is set to leverage on
these trends to drive its next wave of growth.
PKC – Synergistic acquisition, opens up new businesses; Strong growth ahead:
PKC to benefitted from continued healthy growth for Class 8 production trend
for 2019, where for N. America Class 8 trucks as it enjoys ~62% market share of
US Class 8 truck wiring harness and ~54% of revenues contribution from North
America. PKC is also highly focused on world’s largest truck market of China,
where it has three JVs targeting different customers. Lastly, PKC entered rolling
stock business (~USD2b opportunity) in 2015. PKC has already won contract
worth EUR280m from Bombardier since entering into global partnership in May
2016. It is in discussion with other OEMs to develop global supply chain for
electrical system. PKC revenues are expected to grow at 3% CAGR over FY19-
21E, with EBITDA margin expanding to 9.5% in FY20E.
SMRPBV – the growth engine for MSS; SMP on track to improve margins,
RoCE:
SMRPBV’s order-book growth lends us comfort in building ~10.8%
revenue CAGR over FY19-21 for SMRPBV. As of Mar-19, order book stood at
EUR18.2b. SMP is in a sweet spot, as revenue visibility is high and it is nearing
the end of an amplified capex cycle. In the next 12-15 months, with bulk of
SMP’s plants ramping up, it would derive twin benefits of operating leverage
and non-recurrence of start-up costs. We estimate SMP’s (incl Reydel) revenue
4
27 May 2019
 Motilal Oswal Financial Services
Motherson Sumi
to grow at ~15% CAGR to EUR4.8b by FY21 and EBITDA margin to expand 370bp
to ~8% by FY21, driven by operating leverage and substantial reduction in start-
up cost. SMR continues to be #1 PV mirror company globally and has gained
share across markets through continuous innovation. We estimate ~2% CAGR in
SMR’s revenue to EUR1.7b by FY21 and EBITDA margin to expand by 70bp at
12% by FY21.
Standalone business on strong footing; Beneficiary of high growth in domestic
PV segment, premiumization:
The India wiring harness business is likely to grow
faster than the PV industry, led by increase in content (due to ongoing
premiumization). BS-6 would increase complexity of wiring harness and increase
value by 20-50%. Also, it would open up the 2W segment for MSS, as 2Ws shift
to electronic fuel injection systems with more sensors. MSS is already market
leader in 2W wiring harness in EU. The India polymer (MATE) and elastomer
(MAE) businesses are evolving from supporting to core businesses to growth
drivers. Polymer business is focusing on leveraging its strengths in export
markets like South Africa for global OEMs. We expect India standalone business
to witness revenue CAGR of 8% and PAT CAGR of 5.4% over FY19-21E.
Valuation and view:
We cut consol. FY20/21 EPS by 15%/7% to factor in for
ramp up cost impact till 1HFY20 and weak volume outlook for India & PKC.
However, EU business will see favorable base from Sep-19 onwards. This
coupled with execution of strong order book and limited capex at SMPBV along
with India business benefitting from content increase in BS6 augurs well MSS.
The stock trades at 19.7x/16.2x FY20E/21E consol. EPS. Maintain
Buy
with TP of
INR144 (~20x Mar-21 consol. EPS, which is at ~20% discount to 10 years
average).
Exhibit 9: Revised Forecast
(INR M)
Net Sales
EBITDA
EBITDA (%)
Adj. PAT
EPS (INR)
Rev
709,276
61,600
8.7
18,587
5.9
FY20E
Old
724,375
71,811
9.9
21,865
6.9
Chg (%)
-2.1
-14.2
-120bp
-15.0
-15.0
Rev
771,142
76,503
9.9
22,663
7.2
FY21E
Old
794,887
81,196
10.2
24,480
7.8
Chg (%)
-3.0
-5.8
-30bp
-7.4
-7.4
Source: MOFSL
Exhibit 10: P/E and P/B band
61.0
47.0
33.0
19.0
5.0
34.3
25.1
16.0
11.1
19.7
P/E (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
48.8
P/B (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
10.3
6.8
5.0
3.1
2.2
3.2
13.0
10.0
7.0
4.0
1.0
Source: MOFSL
Source: MOFSL
27 May 2019
5
 Motilal Oswal Financial Services
Motherson Sumi
Exhibit 11: Comparative Valuation
Auto OEM's
Bajaj Auto
Hero MotoCorp
TVS Motor
M&M
Maruti Suzuki
Tata Motors
Ashok Leyland
Eicher Motors
Escorts
Auto Ancillaries
Bharat Forge
Exide Industries
Amara Raja Batteries
BOSCH
Endurance Tech
Motherson Sumi
Mahindra CIE
CEAT
CMP
(INR)
3,065
2,822
496
676
7,063
181
91
20,922
638
482
217
642
16,908
1,153
116
237
1,020
Rating
Neutral
Neutral
Neutral
Buy
Buy
Neutral
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
TP
(INR)
3,050
2,912
480
793
8,047
199
107
23,500
724
595
281
761
18,200
1,350
144
290
1,277
P/E (x)
FY20E FY21E
17.6
16.1
16.0
15.3
27.4
21.7
15.3
15.2
25.5
21.1
13.1
12.1
12.6
14.6
23.8
20.8
11.0
10.6
19.7
19.9
19.3
29.2
26.9
19.7
13.8
13.9
17.9
17.7
16.9
25.1
23.3
16.2
12.2
11.2
EV/EBITDA (x)
FY20E FY21E
12.1
10.6
9.3
8.6
14.2
11.5
11.2
11.2
14.6
12.3
3.3
3.1
7.0
7.7
19.6
16.7
-0.6
-0.8
11.0
10.9
9.9
19.8
11.9
1.8
8.3
3.3
10.2
9.8
8.6
16.3
10.2
1.1
6.8
3.1
RoE (%)
FY20E FY21E
21.9
21.5
26.1
24.8
23.5
24.6
13.1
11.7
16.4
18.1
7.5
7.6
24.2
19.2
24.4
23.6
17.7
15.8
19.8
14.0
16.1
19.9
21.7
16.2
14.0
10.3
19.1
14.2
16.4
23.2
21.5
18.2
13.8
11.7
Div Yield (%)
FY20E FY21E
2.1
2.3
3.2
3.4
0.8
0.8
1.5
1.5
1.8
2.0
0.2
0.2
3.7
3.7
0.6
0.6
0.5
0.5
1.3
1.5
1.3
1.2
0.9
1.4
0.0
1.2
1.3
1.5
1.5
1.3
1.1
1.7
0.0
1.3
EPS CAGR. %
FY19-21E
7.2
4.4
27.4
4.6
16.2
NA
-5.0
11.3
6.5
10.3
16.1
15.9
11.5
16.9
18.5
17.1
19.7
Source: Company, MOFSL
27 May 2019
6
 Motilal Oswal Financial Services
Motherson Sumi
Motherson Sumi | Story in charts
Exhibit 12: Revenues and growth trend
Revenues (INR b)
32.8
Growth (%)
Exhibit 13: Consol. EBITDA and margin trend
EBITDA (INR b)
EBITDA Margin (%)
19.9
13.6
6.8
307
349
372
424
563
635
709
13.9
12.8
11.7
8.7
771
9.3
9.0
9.6
9.8
9.1
9.9
8.4
8.7
26.5
30.2
35.5
41.7
51.2
53.5
61.6
76.5
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 14: Business-wise consolidated revenue buildup
CAGR
(%)
8%
4%
2%
5
16%
103
10%
8
772
10%
Exhibit 15: Business-wise EBITDA margins buildup
CAGR
(%)
7%
-4%
6%
58%
9%
20%
12
8
2
53.5
1
2
19
1
76.5
635
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 16: Consolidated PAT growth trend
72
PAT (INR b)
49
25
13
6
-6
8
9
13
16
17
16
19
23
15
22
Growth (%)
Exhibit 17: Trend in return profile
RoCE (%)
29.2
31.8
25.9
17.0
18.4
25.3
19.4
14.7
12.2
15.7
9.8
16.2
10.4
18.2
12.9
ROE (%)
15.9
Source: Company, MOFSL
Source: Company, MOFSL
27 May 2019
7
 Motilal Oswal Financial Services
Motherson Sumi
Financials and valuations
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Raw Materials
Employees Cost
Other Expenses
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Interest Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Total Tax
Tax Rate (%)
Minority Interest
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY17
423,755
13.9
257,507
80,909
43,671
382,087
90.2
41,668
9.8
10,590
31,078
3,749
2,642
29,971
-974
28,997
9,103
31.4
4,350
15,543
16,058
24.3
3.8
FY18
562,933
32.8
343,121
110,678
57,908
511,707
90.9
51,226
9.1
15,752
35,474
4,108
1,701
33,067
-1,777
31,290
10,072
32.2
5,249
15,970
17,024
6.0
3.0
FY19
635,229
12.8
367,383
141,694
72,668
581,745
91.6
53,484
8.4
20,582
32,902
4,232
2,202
30,872
0
30,872
11,022
35.7
3,719
16,132
16,132
-5.2
2.5
FY20E
709,276
11.7
401,808
162,948
82,919
647,676
91.3
61,600
8.7
23,290
38,310
3,950
1,800
36,161
0
36,161
12,295
34.0
5,280
18,587
18,587
15.2
2.6
(INR Million)
FY21E
771,142
8.7
411,575
187,391
95,673
694,639
90.1
76,503
9.9
25,706
50,797
3,939
1,900
48,758
0
48,758
16,334
33.5
9,762
22,663
22,663
21.9
2.9
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Total Loans
Deferred Tax Liabilities
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Misc Expenditure
Appl. of Funds
FY17
1,404
53,265
82,727
22,322
101,418
-5,024
201,443
135,237
33,590
101,647
19,379
19,348
684
137,061
30,716
46,552
48,866
10,927
117,230
73,003
42,600
1,628
19,831
40,554
201,443
FY18
2,105
63,015
93,178
29,600
94,770
-6,266
211,282
174,332
51,138
123,194
22,646
25,849
2,467
133,905
40,132
56,236
27,816
9,722
157,430
90,640
65,168
1,622
-23,525
60,652
211,282
FY19
3,158
81,569
112,785
34,797
109,428
-6,123
250,888
190,917
71,720
119,197
22,646
10,463
2,389
157,377
46,635
61,663
35,469
13,610
176,291
106,613
67,213
2,465
-18,914
115,107
250,888
FY20E
3,158
85,316
116,531
41,817
106,428
-6,123
258,653
212,212
95,010
117,203
22,646
10,463
2,389
154,023
44,694
64,126
32,176
13,026
163,177
119,407
41,488
2,282
-9,154
115,107
258,653
(INR Million)
FY21E
3,158
100,850
132,066
53,318
103,428
-6,123
282,689
231,220
120,716
110,504
22,646
10,463
2,389
195,973
48,593
69,720
63,499
14,162
174,393
133,735
38,177
2,481
21,580
115,107
282,689
27 May 2019
8
 Motilal Oswal Financial Services
Motherson Sumi
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE (post-tax)
RoIC
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Net Debt/Equity
FY17
5.1
7.1
26.2
0.9
23.6
22.8
4.4
0.5
5.2
0.8
7.3
25.3
14.7
20.0
3.1
2.1
26
40
63
1.2
8.3
0.6
FY18
5.4
9.1
29.5
1.5
34.6
21.5
3.9
0.6
6.1
1.3
1.1
19.4
12.2
16.7
3.2
2.7
26
36
59
0.9
8.6
0.7
FY19
5.1
9.6
35.7
1.5
34.2
22.7
3.3
0.7
8.2
1.3
17.8
15.7
9.8
11.8
3.3
2.5
27
35
61
0.9
7.8
0.6
FY20E
5.9
10.9
36.9
1.6
31.5
19.7
3.1
0.6
7.2
1.4
5.9
16.2
10.4
12.2
3.3
2.7
23
33
61
0.9
9.7
0.6
FY21E
7.2
12.6
41.8
1.9
31.5
16.2
2.8
0.5
5.3
1.7
14.4
18.2
12.9
16.1
3.3
2.7
23
33
63
1.1
12.9
0.3
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY17
31,801
10,591
3,324
-8,433
4,813
42,096
-4,099
37,997
-27,789
10,208
-39,675
203
-67,261
25,277
34,092
-3,471
-826
104
55,176
25,912
17,717
43,629
FY18
34,448
15,752
3,777
-10,048
-14,820
29,109
3,531
32,640
-30,308
2,332
-2,876
1,243
-31,941
0
-9,471
-3,944
-6,332
-2,467
-22,214
-21,515
48,866
27,351
FY19
30,872
20,582
4,232
-11,022
11,524
56,188
1,131
57,319
-1,200
56,119
79
0
-1,121
8,994
14,658
-4,232
-5,518
0
13,902
70,100
27,816
97,916
FY20E
36,161
23,290
3,950
-12,295
-13,052
38,053
1,740
39,793
-21,295
18,498
0
0
-21,295
-8,994
-3,000
-3,950
-5,846
0
-21,790
-3,292
35,469
32,176
(INR Million)
FY21E
48,758
25,706
3,939
-16,334
588
62,657
1,740
64,397
-19,007
45,390
0
0
-19,007
0
-3,000
-3,939
-7,129
0
-14,067
31,323
32,176
63,499
27 May 2019
9
 Motilal Oswal Financial Services
Motherson Sumi
Corporate profile
Motherson Sumi Systems (MSS) is the flagship
company of the Samvardhana Motherson Group.
The company was promoted in 1986 in JV with
Sumitomo Wiring Systems and Sojitz Corporation of
Japan. MSSL had started out as a single product
(wiring harness) company, but has since expanded
its product range to include polymer products
(through SMP), automotive mirrors (through SMR)
and elastomers. Its recent acquisition of PKC (100%
owned) strengthens MSS presence in commercial
vehicle wiring harness segment.
Company description
Exhibit 1: Sensex rebased
Source: MOFSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Mar-19
Promoter
DII
FII
Others
61.7
9.7
18.1
10.5
Dec-18
61.7
9.9
17.5
10.9
Mar-18
61.7
9.4
18.8
10.1
Source: Capitaline
Exhibit 3: Top holders
Holder Name
Icici Prudential Capital Protection Oriented
Fund- Series Xi-1247 Days Plan D
Sbi Equity Hybrid Fund
Axis Mutual Fund Trustee Limited A/C Axis
Mutual Fund A/C Axis Children Gift Fund
Europacific Growth Fund
% Holding
3.2
1.3
1.2
1.1
Source: Capitaline
Note: FII Includes depository receipts
Exhibit 4: Top management
Name
Vivek Chaand Sehgal
Laksh Vaaman Sehgal
Nishimura Shunichiro
Noriyo Nakamura
Alok Goel
Designation
Chairman
Director
Director
Director
Company Secretary
Exhibit 5: Directors
Name
Arjun Puri
Gautam Mukherjee
Geeta Mathur
Name
Naveen Ganzu
Sushil Chandra Tripathi
Pankaj K Mital
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
M R Vyas & Associates
S R Batliboi & Co LLP
SGS Associates
Type
Cost Auditor
Statutory
Secretarial Audit
Exhibit 7: MOFSL forecast v/s consensus
EPS
(INR)
FY20
FY21
MOFSL
forecast
5.9
7.2
Consensus
forecast
7.7
9.1
Variation
(%)
-23.3
-20.5
Source: Bloomberg
Source: Capitaline
27 May 2019
10
 Motilal Oswal Financial Services
Motherson Sumi
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOSL, Research Analyst and/or his relatives have financial interest in the subject company, as they have equity holdings in the subject company.
2 MOSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
27 May 2019
11
 Motilal Oswal Financial Services
Motherson Sumi
9 MOSL has not received any compensation or other benefits from third party in connection with the research report
10 MOSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
-
received compensation/other benefits from the subject company in the past 12 months
-
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on
the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL
even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
27 May 2019
12