8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 1/24
Motherson Sumi Systems (MSSL) offers a single window to play the emergingglobal trend of premiumisaton and high growth in China/ India PV industry.MSSL has an impressive track record of managing cost/ quality and synergyacross businesses, as reflected in turnaround at Samvardhana MothersonReflectec (SMR) and Samvardhana Motherson Peguform (SMP). Going forward,we see higher wallet share, premiumisation of PV industry and outperformanceof luxury cars driving 16% revenue CAGR for MSSL over FY14-16E. Marginexpansion at SMP and SMR would drive earnings CAGR of 32%. We initiate
coverage on MSSL with Outperformer and a 12-month price target of Rs274.
Premiumisation and increasing wallet share key growth drivers: The distinct shiftin India PV market towards sedans/ SUVs (53% share in FY13 from 47% in FY08),outperformance of luxury cars globally as also increasing content per car are likelyto be the key growth drivers for MSSL. Adoption of modular platform strategy byOEMs further enhances volume opportunity and visibility for MSSL. We expect17%/ 16%/ 14% revenue CAGR in India business/ SMR/ SMP for FY14-16.
China, higher utilization and synergy benefits to drive profits: Higher share ofhigher-margin China business, in-sourcing and better utilization in Hungary/ USare key margin drivers for SMR. For SMP, profitability will get a boost from higherutilization (order backlog of EUR4bn), including at a few loss-making plants. Wesee 32% CAGR in consolidated PAT (47%/ 83% CAGR in SMR/ SMP) for FY14-16E.
Outperformer with 18% potential upside: We have valued MSSL on SoTP, andassign a target EV/ EBITDA of 11x (FY16E) to standalone business and 6x/ 6x/ 7x toSMR/ SMP/ other subsdiaries. We initate coverage on MSSL with Outperformerand a target price of Rs274. Delayed recovery in Europe/ India, slowdown in Chinaand expensive acquisitions remain key risks to our call.
Pramod Kumar
91-22-6622 2562
For Private Circulation only.
Important disclosures appear at the back of this report”
SEBI Registration Nos.: INB23 12914 37, INF23 12914 37, INB01 12914 33, INF01 12914 33.
Jay Kale, CFA
91-22-6622 2529
Price performance – relative and absolute
(%) 3-mth 6-mth 1-yr
Motherson Sumi 24.1 75.0 79.7BSE Sensex 4.4 13.8 12.9
80
110
140
170
200
Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14
Motherson Sum i Sens ex
Key valuation metrics
As on 31 March FY12 FY13 FY14E FY15E FYNet sales (Rs m) 147,766 253,124 308,157 361,878 416,477
Adj. net profit (Rs m) 2,596 4,445 7,061 12,822 16,717Shares in issue (m) 882 882 882 882 882
Adj. EPS (Rs) 2.9 5.0 8.0 14.5 19.0% change (33.6) 71.2 58.9 81.6 30.4
PE (x) 79.0 46.1 29.0 16.0 12.3Price/ Book (x) 8.6 7.6 5.7 4.2 3.1EV/ EBITDA (x) 27.6 16.5 9.3 6.4 5.0RoE (%) 12.3 17.6 22.5 30.4 29.3RoCE (%) 10.2 10.7 22.8 31.8 36.3
Source: Company, IDFC Securities Research
INSTITUTIONAL SECURITIES
INDIA RESEARCH
Motherson SumiWorld is the canvas
7 March 2014
BSE Sensex: 21920
Sector: Auto Ancillaries
Stock data
CMP (Rs) 232Mkt Cap (Rsbn/USDm) 205 / 3.4
Target Price (Rs) 274Potential from CMP (%) +18
Earnings change (%)FY15E NAFY16E NA
Bloomberg code MSS IN1-yr high/low (Rs) 250/1166-mth avg. daily volumes (m) 0.87
6-mth avg. daily traded value(Rsm/USDm) 166.8 / 2.73
Shares outstanding (m) 882Free float (%) 34.4Promoter holding (%) 65.6
OUTP R ORM R
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 2/24
Motherson Sumi
2 | IDFC SECURITIES 7 March 2014
ContentsWorld is the Canvas....................................................................................................... 3
Investment Argument ................................................................................................... 4
One-stop-shop to play emerging trends in PV industry ................................................. 4
Increasing wallet-share, premiumisation driving growth............................................... 6
SMR/ SMP to drive consolidated margins ..................................................................... 9
Financial Analysis: 32% earnings CAGR over FY14-16E .......................................... 12
Valuations & view ....................................................................................................... 13
Key Risks..................................................................................................................... 14
Scenario analysis.......................................................................................................... 15
Sensitivity analysis....................................................................................................... 16
Annexure........................................................................................................................ 17
Standalone business ..................................................................................................... 17
SMR............................................................................................................................. 19
SMP ............................................................................................................................. 20
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 3/24
Motherson Sumi
3 | IDFC SECURITIES 7 March 2014
W ORLD IS THE CANVAS
Source: Company, IDFC Securities Research
Diversified revenues across products, geographies and OEMs
Key financials (FY14-16E)
Motherson Sumi Systems (Revenue profile; FY13)
49.2
26.6
19.6
4.6
Product-wise revenues
Others
Wiring harness
Mirrors
Modules, polymerprocessing and tooling
Geography-wise revenues
Others
China
Europe
India25
20
12
76642
18
Client-wise revenues
Others
GM FordRenault NissanMaruti
Hyundai
Seat
VW
German luxurymanufacturers
Standalone56.9%
SMR19.5%
SMP16.7%
Other subsidiaries6.9%
Target price contribution from segments
17 21 24
16
5346
14
36
83
0
25
50
75
100
Revenue EBITDA PAT
Standalone SMR SMP(%)
(%)
• Wiring harness• Polymer components• Rubber/metal machined and
other products
• Interior/ Exterior mirror• Camera based blind spot
detection systems• Mirror integrated light modules
• Wiring harness• Polymer components• Rear view mirrors• Bumper and interior modules
• Bumper modules• Front end, Interior modules• Material substitution and light
weighting technologies
Standalone
17%
SMR 27%SMP 50%
Others
6%
(MSSL acquiredSMR in Mar
09 forEUR 25m)
(MSSL acquiredSMP in Nov 11 for EUR
140m)
15
54
9
22
Diversified revenues across products, geographies and OEMs
Key financials (FY14-16E)
Motherson Sumi Systems (Revenue profile; FY13)
49.2
26.6
19.6
4.6
Product-wise revenues
Others
Wiring harness
Mirrors
Modules, polymerprocessing and tooling
Geography-wise revenues
Others
China
Europe
India25
20
12
76642
18
Client-wise revenues
Others
GM FordRenault NissanMaruti
Hyundai
Seat
VW
German luxurymanufacturers
Standalone56.9%
SMR19.5%
SMP16.7%
Other subsidiaries6.9%
Standalone56.9%
SMR19.5%
SMP16.7%
Other subsidiaries6.9%
Target price contribution from segments
17 21 24
16
5346
14
36
83
0
25
50
75
100
Revenue EBITDA PAT
Standalone SMR SMP(%)
17 21 24
16
5346
14
36
83
0
25
50
75
100
Revenue EBITDA PAT
Standalone SMR SMP(%)
(%)
• Wiring harness• Polymer components• Rubber/metal machined and
other products
• Interior/ Exterior mirror• Camera based blind spot
detection systems• Mirror integrated light modules
• Wiring harness• Polymer components• Rear view mirrors• Bumper and interior modules
• Bumper modules• Front end, Interior modules• Material substitution and light
weighting technologies
Standalone
17%
SMR 27%SMP 50%
Others
6%
(MSSL acquiredSMR in Mar
09 forEUR 25m)
(MSSL acquiredSMP in Nov 11 for EUR
140m)
15
54
9
22
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 4/24
Motherson Sumi
4 | IDFC SECURITIES 7 March 2014
I NVESTMENT ARGUMENT One-stop shop to play emerging trends in global PV industry, as it has 125
plants across the world that supply components to all major OEMs
Increasing wallet-share through widening product basket (more content percar) and premiumisation of PVs driving growth; expect 16% CAGR over FY14-16
Synergy benefits at SMR/ SMP and increased order intake as also ramp-up inChina expected to drive consolidated EBITDA margins to 11.7% by FY16E
We estimate consolidated earnings CAGR of 32% over FY14-16E; RoCE toinch closer to the targeted 40% by FY16E
Debt reduction and improving margin profile key triggers for stockperformance; Outperformer at an SoTP-based price target of Rs274
One-stop-shop to play emerging trends in PV industry
MSSL offers a unique opportunity to play the global PV industry, wherein vehiclepremiumisation and high growth in China/ India are the emerging trends.Premiumisation in the global PV industry is evident in the fact that luxury carmakers in Europe have shown a CAGR of 14% against 7% CAGR for the global PVindustry over CY09-12. Also, China and India have registered 14% and 15% CAGRrespectively in PV volumes for the period. Further, by taking exposure to thesetrends via MSSL, investors are largely immune to market share race in thesesegments/ geographies.
Diversified revenues with 125 plants; supplier to all major OEMsMSSL’s consolidated revenues are well diversified with Europe contributing ~54%of the total in FY14, India ~15%, China ~9% and other geographies (Americas, Asia
Pac) contributing ~22%. The company has presence across 25 countries with 125manufacturing plants. It supplies to all the major OEMs globally with germanluxury car manufacturers contributing ~25% of revenues. To further diversify therevenue base, MSSL targets to reduce its dependence to not more than 15% ofrevenues from a single customer, single country or a single commodity.
Exhibit 1: MSSL -- segment-wise revenues with key product offerings
Source: Company, IDFC Securities Research
A play on luxury cars and
India/ China PV growth
Motherson Sumi Systems (FY13 revenues)
Standalone (17%)• Wiring harness• Polymer components• Rubber/metal
machined and otherproducts
SMR (27%)MSSL Acquired SMR in Mar
9 for EUR 25m
• Interior/ Exterior mirror• Camera based blind spot
detection systems• Mirror integrated light
modules
SMP (50%)MSSL Acquired SMP in Nov
11 for EUR 14 m
• Bumper modules• Front end, Interior modules• Material substitution and
light weightingtechnologies
Others (6%)• Wiring harness• Polymer components• Rear view mirrors• Bumper and interior
modules
MSSL looks to limit revenueexposure to 15% for each
customer, country andcommodity
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 5/24
Motherson Sumi
5 | IDFC SECURITIES 7 March 2014
Exhibit: 2 Luxury cars contribute ~30% of revenues, aiding mix Product-wise and geography-wise revenue split
Source: Company, IDFC Securities Research
Exhibit 3: Present across 25 countries with 125 manufacturing facilities
Source: Company
Master of the ‘inorganic game’MSSL has a proven track record of acquiring and turning around distressed assets(e.g., Visiocorp, renamed SMR post acquisition, and Cross AG selling Peguform,now SMP). In fact, acquisition of SMR and SMP were at the behest of large OEMsthat are always in search of stable and larger component suppliers. MSSL hasamply proved its ability to manage costs and quality, which has helped it attain
scale and improve profitability over the years. This also helps MSSL retaincustomers in difficult times. Consider the following:
German luxurymanufacturers
25%
VW20%
Seat12%
Maruti6%
Ford4%
GM2%
Others18%
Hyundai7%
Renault Nissan6%
Product-wise revenues % Geography-wise revenues %Modules, polymer 49 India 15processing and tooling
Mirrors 27 Europe 54Wiring harness 20 China 9Others 4 Others 22
Ability to manage costand quality has helped
MSSL gain scale and boost profitability
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 6/24
Motherson Sumi
6 | IDFC SECURITIES 7 March 2014
Exhibit 4: SMR EBITDA margin touches double digits in Q3FY14 SMP EBITDA margin up 550bp in Q3FY14 from 0.4% in Q3FY12
Source: Company, IDFC Securities Research
Increasing wallet-share, premiumisation driving growth
The increasing share of SUVs and luxury cars in PV industry globally has put MSSLin a sweet spot. While the company has mangaed to capitalise on thepremiumisation trend, it has also expanded its portfolio to include a wider range ofcomponents for different platforms across geographies (standalone India businessand SMR/ SMP -- global OEMs, especially luxury car manufacturers).
Standalone revenues to log CAGR of 17% over FY14-16E…Standalone revenues (India business) have registered a CAGR of 27% over FY08-13,double the PV industry volume CAGR of 13% over the period. Premiumisation (UV,sedans, and premium hatchbacks outperforming small cars) and increasing walletshare (a higher number of component offerings per car) as also an expected recovery
in domestic PV market (expected in 2HFY15), we believe, will drive 17% CAGR inIndia revenues over FY14-16.
Exhibit 5: MSSL revenue CAGR 2x PV volume growth over FY08-13 Uptrading clearly visible even in a tough environment
Source: Company, IDFC Securities Research
24.0 21.5 19.1 18.9 18.2 14.6
29.3 33.7 38.9 39.4 37.332.0
24.7 24.3 22.1 22.1 24.529.6
20.5 19.9 19.6 20.1 23.822.0
0%
20%
40%
60%
80%
100%
FY08 FY09 FY10 FY11 FY12 FY13
Compact hatchback P remium Hatchback Sedans UV+M PV
(15.0)
0.0
15.0
30.0
45.0
60.0
75.0
FY08 FY09 FY10 FY11 FY12 FY13
M SSL revenue gro wth (%) P V pro ductio n vo lume gro wth (%)
PV CAGR (FY08-13) M SSL CA GR (FY08-13)
4.9
3.3
4.9
6.4
5.0 5.0
7.0
8.4 8.6 8.8
10.1
0.0
4.0
8.0
12.0
Q 1 F Y 1 2
Q 2 F Y 1 2
Q 3 F Y 1 2
Q 4 F Y 1 2
Q 1 F Y 1 3
Q 2 F Y 1 3
Q 3 F Y 1 3
Q 4 F Y 1 3
Q 1 F Y 1 4
Q 2 F Y 1 4
Q 3 F Y 1 4
SMR EBITDA margin (%)
0.4
1.6
4.23.7 4.0
3.1
5.5 6.0 5.9
0.0
2.5
5.0
7.5
10.0
Q 3 F Y 1 2
Q 4 F Y 1 2
Q 1 F Y 1 3
Q 2 F Y 1 3
Q 3 F Y 1 3
Q 4 F Y 1 3
Q 1 F Y 1 4
Q 2 F Y 1 4
Q 3 F Y 1 4
SMP EBITDA margin (%)
MSSL has expanded its portfolio to include a wider
range of components fordifferent PV platforms
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 7/24
Motherson Sumi
7 | IDFC SECURITIES 7 March 2014
…with 16%/ 14% CAGR in SMR/ SMP revenuesSMR, headquartered in Germany wherein MSSL has a 47.7% controlling stake, isone of the leading manufacturers of rear view mirrors with a global market share of22%. SMP, 51% held by MSSL (post excerse of put option by PFBeteiligungsverwaltungs for a 16.28% stake), manufactures bumpers, front-end and
interior modules with ~80% of revenues accruing from Europe.
At SMR and SMP, order intake from luxury manufacturers like Audi, BMW,Mercedes and Porsche has gained strong traction in the last few quarters. Notably,BMW and Mercedes are the fastest growing clients. Luxury car manufacturers, towiden their customer base, are launching a slew of smaller luxury cars/ SUVs by
bridging the pricing gap with high-end mass models (see exhibit below). This worksin favour of suppliers as quality and pricing of components in the smaller versionsof luxury brands remain similar to those used in bigger luxury cars/ SUVs. Further,higher contribution of SUVs in the luxury car segment (27.5% of volumes in CY13 vs13.4% in CY08) has been aiding SMR/ SMP’s revneue mix.
Exhibit 6:SUV share in luxury segment going up Entry level luxury cars targeting high-end customers of mass brands
Source: Company, IDFC Securities Research
Exhibit 7: Global foray of SMR and SMP (country-wise capacity expansion)
Source: Company, IDFC Securities Research
Started in 2012Mexico
South America presence started in 2012Brazil
Mirror and glass manufacturing started in H2FY12.Thailand
Started plant in FY12 it will double central europecapacity. Revenue opportunity of Euro 150m.Capacity utilisation now at 55% vs 30% earlier
Hungary
Central China plant to start in 2014, Beijing and Yancheng started in 2013.
China
Significant plant expansion and second automaticpaint facility in Marysville
USA
SMR capacity expansion over 2012-14
Started in 2012Mexico
South America presence started in 2012Brazil
Mirror and glass manufacturing started in H2FY12.Thailand
Started plant in FY12 it will double central europecapacity. Revenue opportunity of Euro 150m.Capacity utilisation now at 55% vs 30% earlier
Hungary
Central China plant to start in 2014, Beijing and Yancheng started in 2013.
China
Significant plant expansion and second automaticpaint facility in Marysville
USA
SMR capacity expansion over 2012-14
Expansion in Foshan (South China, interiors forpremium car makers) and Beijing to start in 2014
China
Expansion of facilities, houses the largest paintshop for plastics in Europe
Germany
Greenfield expansion for interior and exteriormodules started in 2013
Mexico
Doubling capacity for automated painting of largepolymer parts
Brazil
SMP capacity expansion over 2012-14
Expansion in Foshan (South China, interiors forpremium car makers) and Beijing to start in 2014
China
Expansion of facilities, houses the largest paintshop for plastics in Europe
Germany
Greenfield expansion for interior and exteriormodules started in 2013
Mexico
Doubling capacity for automated painting of largepolymer parts
Brazil
SMP capacity expansion over 2012-14
86.6 84.0 81.0 78.9 75.9 72.5
13.4 16.0 19.0 21.1 24.1 27.5
0%
25%
50%
75%
100%
CY08 CY09 CY10 CY11 CY12 CY13
Sedans/ hatchbacks SUV Higher-end mass Price (GBP) Entry-level Price (GBP)
manufacturer cars luxury carsVolkswagen Jetta 18,075 BMW 1-series 17,775Volkswagen Passat 20,235 Mercedes A-class 20,715Honda Accord 23,195 Mercedes B-class 22,015
Audi A3 22,825BMW 3-series 23,550
Order intake from marqueenames like Audi, BMW,
Porsche and Mercedes hasaccelerated recently
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 8/24
Motherson Sumi
8 | IDFC SECURITIES 7 March 2014
Exhibit 8: Increasing content per car aiding robust revenue growth for MSSL
Source: Company
Platform strategy widens SMR/ SMP’s scopeOEMs are increasingly adopting the platform strategy – similar to Volkswagen’s
MQB (Modularer Querbaukasten) – wherein a single platform has the capability tomanufacture multiple models. SMR/ SMP typically win orders for a particularplatform and, with multiple models launched on a single platform, SMR/ SMP areable to increase their wallet share considerably.
Also, SMR/ SMP are involved with OEMs right from coneptualisation stage of aparticular platform. This strengthens their understanding of the platform anddeepens the relationship with the OEM, which helps them become a preferredsupplier. This is evident in the fact that fresh orders in H1FY14 at SMR/ SMP standat EUR842m/ EUR1.8bn.
These orders would start getting implemented from FY16 and will last for five
years, which implies high revenue visibility for the entities. Outstanding order books of SMR and SMP currently stand at a healthy EUR2bn and EUR4bnrespectively. Over FY14-16E, we expect 16%/ 14% CAGR in revenues of SMR/ SMP.
A single platform capableof making multiple modelshelps increase wallet share
SMR and SMP’s platformexpertise has helped MSSLdeepen client relationships
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 9/24
Motherson Sumi
9 | IDFC SECURITIES 7 March 2014
Exhibit 9: Revenue CAGR of standalone/ SMR/ SMP and consolidated over FY14-16E
17.015.5
13.5
16.2
0.0
4.5
9.0
13.5
18.0
Standalone SMR* SMP* Consolidated
Revenue CAGR (FY14-16E)(%)
Source: Company, IDFC Securities Research; *SMR, SMP revenue CAGR in EUR m
SMR/ SMP to drive consolidated margins
We expect consolidated EBITDA margins to expand 240bp over FY14-16E, to 11.7%.Standalone EBITDA margins are estimated to increase by 150bp to 20.8% in FY16E(20% in FY15E) as premiumisation and an expected recovery in the domestic PVindustry in 2HFY15 would drive utlisation levels higher in this business. However,SMR/ SMP would have a higher contribution in incremental margins. We estimate360bp/ 220bp margin expansion at SMR/ SMP to 13%/ 8% by FY16E.
China and higher utilisation globally key margin drivers for SMRSMR’s 510bp margin expansion, to 10.1%, in last seven quarters has been led bygeneration of new orders from European OEMs (predominantly Audi, BMW andMercedes) and synergy benefits via increased in-house sourcing (e.g. wiringharnesses). We expect EBITDA margins to further improve to 11.5%/ 13% in FY15E/FY16E, closer to the company’s “mid-teen EBITDA margin” target. The key drivers ofmargin expansion include:
SMR has doubled its capacity in USA post setting up a new plant in Michigan.With commercial production expected to commence in FY15, the companyalready has bagged orders from Ford, GM, Chrysler. Higher utilisation in USA,we believe, augurs well for margins.
In China, the company would set up two new plants over the next 12 months,which implies a higher contribution to overall revenues from China. China is byfar the most profitable geography for OEMs, and thereby for ancillarymanufacturers – notably, volume contribution of China for luxury car
manufacturers is 20-30% against profit contribution of 40-50%. SMR targets toincrease its market share in China to 25% in 2017 from 10% currently.
Utilisation rates at SMR’s Hungary plant have been rising consistently (60% inQ3FY14 from 30% in Q1FYFY13) with the company receiving fresh orders fromGerman luxury car brands. Further, SMR’s European units are likely to seemargin improvement with increasing in-sourcing arrangements. The Europeanunits usually buy wiring harness through various vendors, which would bereplaced by in-house sourcing.
SMR is targetingmid-teen level EBITDA
margins
China’s contribution tomargins will increase with
setting up of two new plantsin next 12 months
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 10/24
Motherson Sumi
10 | IDFC SECURITIES 7 March 2014
Turnaround in loss-making plants to boost profitability at SMPSMP has seen substantial improvement in performance at some of its loss-makingplants. For example, SMP’s Brazil plant has now turned profitable from a EUR70mloss in FY13 as the company reworked prices to get incremental orders which led to
better utilisation. SMP has identified five such loss-making plants, and expects them
to turnaround in the near future boosting profitability.
Further, in line with the in-sourcing strategy at SMR, SMP plans to shift to in-sourcing of components. This, we believe, will be margin-accretive for SMP.Margins would get a further boost from the more-profitable new orders and ramp-up in China (see box below). We expect SMP’s EBITDA margins to expand to 7%/8% in FY15E/ FY16E from 3.8%/ 5.8% in FY13/ FY14E.
China to be a key catalyst for margin expansion at SMR/ SMP
SMR is present in China via a 50:50 JV (formed in 2007) with Ningbo Huaxang group while SMP has a 51:49 JV with Changshu Automotive Trim Co. (CAIP).
China contributes ~10%/ ~12% to SMR/ SMP revenues. For SMR, VW is the largest client in China (45% of China revenues) followed by Toyota (10%) and Audi
(5%). Audi and VW contribute to 95% of SMP’s China revenues with BMW and Daimler being the recentadditions to portfolio. SMP’s Foshan (interiors for premium car manufacturers) facility would begincommercial production in CY14.
The management expects SMR’s market share in China to move up to 25% by 2017 from 10% currently. It hasalready bagged 16 new orders across facili ties.
China is by far the most profitable geography for global OEMs and component players. Therefore, increasingcontribution from operations in China would boost overall margins of these operations.
Sustained recovery in Europe to expedite margin improvementEurope contributes ~46% to SMR’s and ~80% to SMP’s revenues. Notably, Europe
PV market is showing signs of bottoming out and, post a compounded annualdecline of 4% over CY08-12, car sales have grown 6% yoy in Q4CY13. A full-fledgedrecovery in Europe would increase utilisation rates at both SMR and SMP, whichwould translate into higher profitability for these operations.
Exhibit 10: European PV segment showing early signs of recovery
(20.0)
(10.0)
0.0
10.0
20.0
Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13
Europe car growth yoy (%)
Source: Company, IDFC Securities Research
Brazil plant back in theblack; turnaround of other
loss-making plants to boost profitability
Europe recovery wouldlead to improved utilisation
rates for SMR and SMP
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 11/24
Motherson Sumi
11 | IDFC SECURITIES 7 March 2014
With a turnaround in SMR/ SMP and steady performance at standalone operations,we expect consolidated EBITDA margins to grow to 10.6%/ 11.7% in FY15E/ FY16E.
Exhibit 11: Management targets mid-teen EBITDA maring for SMR SMP EBITDA margin trend; to expand 670bp over FY12-FY16E
Source: Company, IDFC Securities Research
Exhibit 12: Standalone margin; steady despite tough environment Consolidated EBITDA margin expansion to be led by SMR/ SMP
16.2 16.1
18.4 19.3 20.0
20.8
0.0
6.0
12.0
18.0
24.0
FY11 FY12 FY13 FY14E FY15E FY16E
Standalone EBITDA margin (%)
10.8
7.2 7.6
9.3
10.6
11.7
0.0
3.0
6.0
9.0
12.0
FY11 FY12 FY13 FY14E FY15E FY16E
Consolidated EBITDA margin (%)
Source: Company, IDFC Securities Research
7.0
5.0
6.5
9.4
11.5
13.0
0.0
4.0
8.0
12.0
16.0
FY11 FY12 FY13 FY14E FY15E FY16E
SMR EBITDA margin (%)
1.3
3.8
5.8
7.0
8.0
0.0
2.5
5.0
7.5
10.0
FY12 FY13 FY14E FY15E FY16E
SMP EBITDA margin (%)
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 12/24
Motherson Sumi
12 | IDFC SECURITIES 7 March 2014
Financial Analysis: 32% earnings CAGR over FY14-16E
We expect MSSL to register consolidated earnings CAGR of 32% over FY14-16E, led by earnings CAGR of 46%/ 83% at SMR/ SMP owing to higher order intake,expansion in the more-profitable China geography and increasing content pervehicle. In the standalone business, PV market recovery should drive earningsCAGR of 24% over the period.
Exhibit 13: Revenues from key businesses Revenue contribution from key businesses
Source: Company, IDFC Securities Research
Exhibit 14: EBITDA from key businesses EBITDA contibution from key businesses
Source: Company, IDFC Securities Research
Exhibit 15: PAT (after concern share) from key businesses PAT (after concern share) contribution from key businesses (%)
Source: Company, IDFC Securities Research
Revenue (Rs m) FY13 FY14E FY15E FY16EStandalone 43,217 45,378 51,731 62,077SMR 69,538 91,763 110,194 127,826SMP 127,848 156,505 184,716 210,576Others 15,567 14,511 15,237 15,999Total 256,170 308,157 361,878 416,477
16.9 14.7 14.3 14.9
27.1 29.8 30.5 30.7
49.9 50.8 51.0 50.6
6.1 4.7 4.2 3.8
0%
25%
50%
75%
100%
FY13 FY14E FY15E FY16E
Standalone SMR SMP Others
EBITDA (Rs m) FY13 FY14E FY15E FY16EStandalone 7,943 8,758 10,346 12,912SMR 4,511 8,670 12,672 16,617SMP 4,805 9,139 12,930 16,846Others 2,181 2,338 2,286 2,400
Total 19,440 28,905 38,234 48,775
40.930.3 27.1 26.5
23.230.0 33.1 34.1
24.7 31.6 33.8 34.5
11.2 8.1 6.0 4.9
0%
25%
50%
75%
100%
FY13 FY14E FY15E FY16E
Standalone SMR SMP Others
PAT (Rs m) FY13 FY14E FY15E FY16EStandalone 4,893 5,242 6,464 8,110SMR 527 1,987 3,148 4,274SMP 180 1,021 2,341 3,420Others 749 1,209 868 911Total 6,349 9,459 12,821 16,716
77.1
55.4 50.4 48.5
8.3
21.0 24.6 25.6
2.810.8 18.3 20.5
11.8 12.8 6.8 5.5
0%
25%
50%
75%
100%
FY13 FY14E FY15E FY16E
Standalone SMR SMP Others
SMR/ SMP to register a 46%/83% CAGR over FY14-16E
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 13/24
Motherson Sumi
13 | IDFC SECURITIES 7 March 2014
RoCE expected to touch 36% in FY16EMSSL targets to reach RoCE of 40% over FY15-16E. However, our assumptionsincorporate RoCE of 36% in FY16E – a 1,380bp improvement over FY14E. Marginexpansion at SMR and SMP would help the company bring down consolidated netdebt to Rs27bn, thereby boosting RoCE. Notably, a sharper-than-expected recovery
in European markets could see MSSL achieving its targeted RoCE of 40%.
Exhibit 16: RoCE trend – to inch up closer to its targeted 40% due to debt reduction
19.5
10.2 10.7
22.6
31.9
36.4
0.0
10.0
20.0
30.0
40.0
FY11 FY12 FY13 FY14E FY15E FY16E
RoCE (%)
Source: Company, IDFC Securities Research
Valuations & view
We value MSSL on an SoTP basis with targeted standalone EV/ EBITDA multiple at11x (~20% discount to average multiple pre-SMR acquistion) FY16E and arrive at atarget per share value of Rs161. We assign a target EV/ EBITDA multiple of 6x/ 6x toSMR/ SMP, arriving at a target per share value of Rs54/ Rs58. Our targetconsolidated net debt stands at Rs27bn or Rs18 per share. Other subsidiaries have
been valued at Rs19 per share. Thus, our SoTP target price stands at Rs274 withimplied P/E of ~14.5x, ~20% discount to historical average P/E pre-SMR acquisition.
Exhibit 17: MSSL – SoTP valuation Target price contribution from segments
Source: Company, IDFC Securities Research; * - 51% stake post exercise of put option
EBITDA EV/ EBITDA Value Value/
(Rs m) (x) (Rs m) share (Rs)FY16E standalone 12,912 11.0 142,032 161FY16E SMR ( 47.7% stake) 16,617 6.0 47,559 54FY16E SMP* ( 51% stake) 16,846 6.0 51,549 58Other subsidiaries 2,400 7.0 16,799 19
Less: Consol Net debt 15,906 18Target Price 274
Standalone56.9%
SMR19.5%
SMP16.7%
Other subs idiaries6.9%
Margin expansion at SMRand SMP to reduce
consolidated net debt toRs27bn, boosting RoCE
Our target price of Rs274implies a PE of ~14.5x,
~20% discount to pre-SMRhistorical average
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 14/24
Motherson Sumi
14 | IDFC SECURITIES 7 March 2014
Exhibit 18: Peer comparison valuation:
Company Mkt cap P/E (x) EV/ EBITDA (x) RoE (%) RoCE (%)
(US$m) FY14 FY15 FY16 FY14 FY15 FY16 FY14 FY14MOTHERSON SUMI SYSTEMS LTD 3,238 29.0 16.0 12.3 9.3 6.4 5.0 22.5 22.8
Faurecia * 5,429 42.2 15.7 11.0 5.4 4.7 4.0 6.4 9.1Plastic Omnium * 5,490 19.2 14.9 12.4 8.3 7.6 6.8 22.7 12.9Visteon Corp * 4,079 6.1 20.8 17.2 7.1 6.2 5.5 41.8 7.4Johnson Controls Inc # 32,710 28.6 15.1 12.9 10.5 10.0 9.0 9.8 8.7Gentex Corp 4,627 20.5 17.5 16.2 12.8 10.0 9.2 18.2 15.7Global peers average 23.3 16.8 13.9 8.8 7.7 6.9 19.8 10.8
Bharat Forge 1,502 23.0 18.0 14.9 11.1 9.7 8.6 16.2 6.0Bosch * 4,686 31.0 26.1 20.6 19.4 16.3 13.3 14.9 17.8
Amara Raja Batteries 1,078 17.9 16.3 13.2 11.6 9.8 7.7 30.8 38.5Exide Industries 1,587 22.0 18.4 15.7 12.2 10.4 8.8 12.8 17.6
Domestic peers average 22.2 18.7 16.0 13.0 11.1 9.5 18.3 19.8Source: Company, IDFC Securities Research, * Calender year-ending; #-September year ending
Key Risks Extended recession in Europe
An extended recession in Europe will hit utlilisation rates of SMR/ SMP plants,thereby dampening margins. With 50%+ of revenues coming from Europe, theregion is SSML’s mainstay.
Expensive acquisitions stretching balance sheetMSSL has stated its strategy of growing organically as well as inorganically.However, any future acquisitions will stretch the company’s balance sheet as debt iscurrently high (1.6x D/E).
Delayed recovery in India; slowdown in ChinaIndia contributes >50% of SSML’s consolidated PAT. We have built in a recovery inthe domestic passenger vehicle industry in 2HFY15. Any delay in a rebound will hitstandalone business financials. Further, slowdown in China would restrict marginexpansion at SMR/ SMP as China is one of the faster growing, high margingeography for SMR/ SMP.
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 15/24
Motherson Sumi
15 | IDFC SECURITIES 7 March 2014
Scenario analysis
Bear case Base case Bull case
FY14E FY15E FY16E FY14E FY15E FY16E FY14E FY15E FY16EStandaloneRevenues (Rs m) 45,378 49,008 52,929 45,378 51,731 62,077 45,378 56,722 76,575
yoy (%) 5.0 8.0 8.0 5.0 14.0 20.0 5.0 25.0 35.0EBITDA (Rs m) 8,758 7,841 8,469 8,758 10,346 12,912 8,758 13,613 18,378EBITDA margin (%) 19.3 16.0 16.0 19.3 20.0 20.8 19 24.0 24.0PAT (Rs m) 5,242 4,686 4,955 5,242 6,464 8,110 5,242 8,784 11,991yoy (%) 7 (10.6) 5.7 7.1 23.3 25.5 7 67.6 36.5EPS (Rs) 5.9 5.3 5.6 5.9 7.3 9.2 5.9 10.0 13.6Net debt (Rs m) 4,200 4,412 3,500EV/ EBITDA Target multiple (x) 10.0 11.0 13.0Standalone per share value (Rs) 91 156 267
SMRRevenue (EUR m) 1,127 1,240 1,364 1,127 1,296 1,504 1,127 1,409 1,761yoy (%) 13.5 10.0 10.0 13.5 15.0 16.0 13.5 25.0 25.0EUR:INR 81.4 75.0 75.0 81.4 85.0 85.0 81.4 90.0 90.0Revenue (Rs m) 91,763 93,003 102,303 91,763 110,194 127,826 91,763 126,822 158,528yoy (%) 32 1.4 10.0 32.0 20.1 16.0 32 38.2 25.0EBITDA (Rs m) 8,670 8,370 9,207 8,670 12,672 16,617 8,670 17,755 25,364EBITDA margin (%) 9.4 9.0 9.0 9.4 11.5 13.0 9.4 14.0 16.0PAT (concern share) 2,044 1,833 1,942 2,044 3,331 4,523 2,044 5,102 7,570yoy (%) 365.5 (10.3) 6.0 365.5 59.5 35.8 365.5 149.5 48.4Net debt (Rs m) 1200.0 712 500.0EV/ EBITDA Target multiple (x) 5.0 6.0 7.0SMR per share value (Rs, 47.7%) 24 54 96SMP
Revenue (EUR m) 1,923 2,039 2,161 1,923 2,173 2,477 1,923 2,269 2,678yoy (%) 5.3 6.0 6.0 5.3 13.0 14.0 5.3 18.0 18.0
EUR:INR 81.4 75.0 75.0 81.4 85.0 85.0 81 90.0 90.0Revenue (Rs m) 156,505 152,888 162,061 156,505 184,716 210,576 156,505 204,235 240,998yoy (%) 22.4 (2.3) 6.0 22.4 18.0 14.0 22.4 30.5 18.0EBITDA (Rs m) 9,139 7,644 8,103 9,139 12,930 16,846 9,139 18,381 21,690EBITDA margin (%) 5.8 5.0 5.0 5.8 7.0 8.0 5.8 9.0 9.0PAT (concern share) 797 354 234 1,021 2,341 3,420 797 3,346 4,019yoy (%) - (55.5) (34.1) 468 129 46 - 319.8 20.1Net debt (Rs m) 25,000 21,872 18,000EV/ EBITDA Target multiple (x) 5.0 6.0 8.0SMP per share value (Rs, 51%) 7 46 72
ConsolRevenue (Rs m) 308,157 310,136 333,292 308,157 361,878 416,477 308,157 403,017 492,099yoy (%) 0.6 7.5 17.4 15.1 30.8 22.1EBITDA (Rs m) 28,905 26,141 28,179 28,905 38,234 48,775 28,905 52,035 67,832EBITDA margin (%) 9.4 8.4 8.5 9.4 10.6 11.7 9.4 12.9 13.8PAT (concern share) 9,512 7,969 8,282 9,736 13,233 17,205 9,512 18,328 24,731yoy (%) - (16.2) 3.9 - 35.9 30.0 - 92.7 34.9FDEPS 10.8 9.0 9.4 11.0 15.0 19.5 10.8 20.8 28.0
Target Price (Rs) 142 274 454CMP (Rs) 232 232 232Potential (%) (39.0) 18.1 95.2
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 16/24
Motherson Sumi
16 | IDFC SECURITIES 7 March 2014
Sensitivity analysis
Target price sensitivity to FY16E SMR EBITDA margin and SMP EBITDA margin
FY16E SMR EBITDA margin (%)
9.0 12.0 13.0 15.0 16.0
5.0 236 248 253 261 2656.0 243 256 260 268 2728.0 258 270 274 283 287
10.0 272 285 289 297 30212.0 287 300 304 312 316
Target price sensitivity to FY16E SMR revenue growth and EBITDA margin
FY16E SMR revenue growth (%)
10.0 15.0 16.0 20.0 25.09.0 256 258 258 259 261
12.0 268 270 270 272 274
13.0 272 274 274 276 27915.0 280 282 283 285 28816.0 283 286 287 289 292
Target price sensitivity to FY16E SMP revenue growth and EBITDA margin
FY16E SMP revenue growth (%)
6.0 10.0 14.0 16.0 18.05.0 250 251 253 253 2546.0 257 258 260 261 2618.0 270 272 274 275 276
10.0 284 286 289 290 292
12.0 298 301 304 305 307
Target price sensitivity to FY16E standalone revenue growth and EBITDA margin
FY16E Standalone revenue growth(%)
5.0 10.0 20.0 25.0 30.016.0 222 227 237 242 24818.0 235 241 253 259 26420.8 254 261 274 281 28822.0 262 270 284 291 29824.0 276 284 299 307 315
F Y 1 6 E S M P
E B I T D A
m a r g
i n ( % )
F Y 1 6 E
S M R
E B I T D A
m a r g i n
( % )
F Y 1 6 E S M P
E B I T D A
m a r g
i n ( % )
F Y 1 6 E
S t a n
d a l o n e
E B I T D A
m a r g
i n ( % )
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 17/24
Motherson Sumi
17 | IDFC SECURITIES 7 March 2014
ANNEXURE Exhibit 19: Shareholding pattern
Source: Company, IDFC Securities Research
Standalone business
Exhibit 20: Product portfolio; bulk of the sale from wiring harness Wiring harness India market share; MSSL clear leader
Wiring harness75%
Polymercomponents
24%
Rubber/metalmachined andother products
1%
Motherson Sumi65%
Yazaki16%
Others19%
Source: Company, IDFC Securities Research
Other JV’s &SubsidiariesOther JV’s &Subsidiaries
Public & Others
Samvardhana Motherson Reflectec (SMR)Global Rear View Business
(Total Holding 93.6%)
Samvardhana Motherson Reflectec (SMR)Global Rear View Business
(Total Holding 93.6%)
Sumitomo WiringSytems SWS) Sehgal Family Sojitz Corporation Empolyees
Motherson Sumi Systems Limited(MSSL)
Motherson Sumi Systems Limited(MSSL)
Samvardhana Motherson International Limited(SMIL)
Samvardhana Motherson International Limited(SMIL)
Samvardhana Motherson Peguform (SMP)Global Polymer Business
(Total Holding 83.7%)
Samvardhana Motherson Peguform (SMP)Global Polymer Business
(Total Holding 83.7%)
Other JV’s &SubsidiariesOther JV’s &Subsidiaries
34.53% 25.55% 3.80% 90.3% 6.5% 3.2%
36.12%
51%
51%
49%
49%
Other JV’s &SubsidiariesOther JV’s &Subsidiaries
Public & Others
Samvardhana Motherson Reflectec (SMR)Global Rear View Business
(Total Holding 93.6%)
Samvardhana Motherson Reflectec (SMR)Global Rear View Business
(Total Holding 93.6%)
Sumitomo WiringSytems SWS) Sehgal Family Sojitz Corporation Empolyees
Motherson Sumi Systems Limited(MSSL)
Motherson Sumi Systems Limited(MSSL)
Samvardhana Motherson International Limited(SMIL)
Samvardhana Motherson International Limited(SMIL)
Samvardhana Motherson Peguform (SMP)Global Polymer Business
(Total Holding 83.7%)
Samvardhana Motherson Peguform (SMP)Global Polymer Business
(Total Holding 83.7%)
Other JV’s &SubsidiariesOther JV’s &Subsidiaries
34.53% 25.55% 3.80% 90.3% 6.5% 3.2%
36.12%
51%
51%
49%
49%
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 18/24
Motherson Sumi
18 | IDFC SECURITIES 7 March 2014
Exhibit 21: Standalone business plant locations
Source: Company
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 19/24
Motherson Sumi
19 | IDFC SECURITIES 7 March 2014
SMR
Exhibit 22: Gepgraphy-wise revenue contribution Global rear-view mirror market share
Europe46%
Asia Pacific32%
Americas22% SMR
22%
MagnaInternational
37%
Gentex18%
Ficosa14%
Others9%
Source: Company, IDFC Securities Research
Exhibit 23: SMR Plant locations
Source: Company
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 20/24
Motherson Sumi
20 | IDFC SECURITIES 7 March 2014
SMP
Exhibit 24: Product range
Source: Company; IDFC Securities Research
Exhibit 25: Bumpers market share – Europe Front end module market share – Europe, North America
SMP9%
Faurecia25%
Plastic Omnium17%
Magna15%
Others34%
HBPO49%
Magna19%
FAE15%
Others17%
Source: Company; IDFC Securities Research; Faurecia presentation
Exhibit 26: Global plastic interior systems market share Plastic exterior systems market share - Europe
SMP6%
Faurecia15%
JohnsonControls Inc.
12%
IAC10%Visteon
10%
Magna7%
Others40%
SMP16%
Faurecia31%
Plastic Omnium19%
Magna16%
Rehau11%
Others7%
Source: Company; IDFC Securities Research; Faurecia presentation
SMP is market leader for bumper covers in Germany and Spain. One of the largest business segments of SMPBumper modules
Expertise in manufacturing and supplying highly complex systems with large dimensions
High value content addeed to bunper covers such as crash beams, lighting systems, air coolers, air vents, washernozzles, parking sensors
Front endmodules
Dashboards, fully assembled cockpits, centre consoles, door panels, covers and decorative trimsInterior modules
After several years of research, SMP has recieived a high volume order for the production of innovative natural fibrereiinforced interior components in early 2013
Materialsubstitution andlight weightingtechnologies
SMP is market leader for bumper covers in Germany and Spain. One of the largest business segments of SMPBumper modules
Expertise in manufacturing and supplying highly complex systems with large dimensions
High value content addeed to bunper covers such as crash beams, lighting systems, air coolers, air vents, washernozzles, parking sensors
Front endmodules
Dashboards, fully assembled cockpits, centre consoles, door panels, covers and decorative trimsInterior modules
After several years of research, SMP has recieived a high volume order for the production of innovative natural fibrereiinforced interior components in early 2013
Materialsubstitution andlight weightingtechnologies
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 21/24
Motherson Sumi
21 | IDFC SECURITIES 7 March 2014
Exhibit 27: Geography-wise sales break-up Customer-wise sales break-up
Germany46%
Spain32%
China12%
Brazil6%
Mexico4%
Volksw agen27%
Audi23%Seat
16%
BMW9%
Others25%
Source: Company; IDFC Securities Research
Exhibit 28: SMP plant location map
Source: Company
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 22/24
Motherson Sumi
22 | IDFC SECURITIES 7 March 2014
Income statement
Year to 31 Mar (Rs m) FY12 FY13 FY14E FY15E FY16ENet sales 147,766 253,124 308,157 361,878 416,477
% growth 79.1 71.3 21.7 17.4 15.1
Operating expenses 138,841 238,357 281,936 323,644 367,702
EBITDA 8,925 14,767 26,221 38,234 48,775
% change 16.4 65.5 77.6 45.8 27.6
Other income 1,336 3,121 234 806 877
Net interest (1,649) (2,495) (2,889) (2,750) (2,550)
Depreciation 3,796 7,145 8,330 9,768 11,752
Pre-tax profit 4,116 8,342 15,236 26,522 35,350
Current tax 2,153 3,835 5,400 8,000 10,662
Profit after tax 1,963 4,507 9,836 18,522 24,689
Preference dividend (2) (8) (1) (1) (1)
Minorities 631 (70) (2,776) (5,701) (7,973)
Non-recurring items 700 (94) 2,590 - -
Net profit after
non-recurring items 3,296 4,351 9,651 12,822 16,717
% change (13.5) 32.0 121.8 32.9 30.4
Balance sheet
As on 31 Mar (Rs m) FY12 FY13 FY14E FY15E FY16EPaid-up capital 388 588 588 588 588
Reserves & surplus 18,325 22,302 28,428 35,433 44,584
Total shareholders' equity 23,740 26,915 35,817 48,523 65,646
Total current liabilities 51,283 55,140 54,528 66,249 70,584
Total debt 41,289 40,712 41,651 41,107 36,475
Deferred tax liabilities 1,542 1,616 1,616 1,616 1,616
Other non-current liabilities 2,744 4,067 4,237 4,414 4,599
Total liabilities 96,858 101,535 102,031 113,386 113,274
Total equity & liabilities 120,598 128,450 137,848 161,909 178,920
Net fixed assets 49,535 54,422 57,486 59,852 60,115Investments 938 716 788 866 953
Total current assets 64,390 67,187 73,287 94,732 111,215
Deferred tax assets 940 1,057 1,144 1,209 1,278
Other non-current assets 4,795 5,068 5,143 5,250 5,360
Working capital 13,107 12,047 18,759 28,483 40,631
Total assets 120,598 128,450 137,848 161,909 178,921
Cash flow statement
Year to 31 Mar (Rs m) FY12 FY13 FY14E FY15E FY16EPre-tax profit 4,116 8,342 15,236 26,522 35,350
Depreciation 3,796 7,145 8,330 9,768 11,752
Chg in Working capital (5,974) 2,505 (6,658) (7,854) (12,458)Total tax paid (2,153) (3,835) (5,400) (8,000) (10,662)
Ext ord. Items & others 2,357 918 3,447 1,209 1,733
Operating cash Inflow 2,142 15,075 14,956 21,645 25,716
Capital expenditure (33,610) (12,394) (11,395) (12,134) (12,015)
Free cash flow (a+b) (31,468) 2,681 3,561 9,511 13,701
Chg in investments (473) 222 (72) (79) (87)
Debt raised/(repaid) 29,866 (577) 939 (543) (4,632)
Capital raised/(repaid) (0) 5 - - -
Dividend (incl. tax) (2,525) (2,230) (1,900) (3,941) (6,135)
Misc 5,625 1,287 - - -
Net chg in cash 1,025 1,387 2,528 4,948 2,847
Key ratios
Year to 31 Mar FY12 FY13 FY14E FY15E FY16EEBITDA margin (%) 6.0 5.8 8.5 10.6 11.7
EBIT margin (%) 3.5 3.0 5.8 7.9 8.9
PAT margin (%) 1.8 1.8 2.3 3.5 4.0
RoE (%) 12.3 17.6 22.5 30.4 29.3
RoCE (%) 10.2 10.7 22.8 31.8 36.3
Gearing (x) 1.5 1.3 0.9 0.6 0.3
Valuations
Year to 31 Mar FY12 FY13 FY14E FY15E FY16EReported EPS (Rs) 3.7 4.9 10.9 14.5 19.0
Adj. EPS (Rs) 2.9 5.0 8.0 14.5 19.0
PE (x) 79.0 46.1 29.0 16.0 12.3
Price/ Book (x) 8.6 7.6 5.7 4.2 3.1
EV/ Net sales (x) 1.7 1.0 0.8 0.7 0.6
EV/ EBITDA (x) 27.6 16.5 9.3 6.4 5.0
EV/ CE (x) 3.6 3.3 2.9 2.6 2.3
Consolidated fiiancials (FY14-16E)
16
30 32
0
10
20
30
40
Revenue EBITDA PAT
CAGR FY14-16E(%)
Shareholding pattern
Promoters65.6%
Foreign17.3%
Institutions7.8%
Non-
promotercorporate
holding3.5%
Public &Others5.9%
As of December 2013
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 23/24
Motherson Sumi
23 | IDFC SECURITIES 7 March 2014
Analyst Sector/Industry/Coverage E-mail Tel. 91-22-6622 2600 Shirish Rane Head of Research; Construction, Power [email protected] 91-22-662 22575Prakash Joshi Oil & Gas, Metals, Mining [email protected] 91-22-662 22564Nitin Agarwal Pharmaceuticals, Real Estate, Agri-inputs [email protected] 91-22-662 22568Hitesh Shah, CFA IT Services & Telecom [email protected] 91-22-662 22565Manish Chowdhary Financials [email protected] 91-22-662 22563Bhoomika Nair Engineering, Cement, Power Equipment, Logistics [email protected] 91-22-662 22561Pramod Kumar Automobiles, Auto ancillaries [email protected] 91-22-662 22562
Ashish Shah Construction, Power [email protected] 91-22-662 22560 Abhishek Gupta Telecom, IT services [email protected] 91-22-662 22661Mohit Kumar, CFA Construction, Power [email protected] 91-22-662 22573
Param Desai Pharmaceuticals, Real Estate, Agri-inputs [email protected] 91-22-662 22579Probal Sen Oil & Gas [email protected] 91-22-662 22569Saumil Mehta Metals, Mining [email protected] 91-22-662 22578Harit Kapoor FMCG, Retail, Alcoholic Beverages [email protected] 91-22-662 22649Sameer Bhise Financials [email protected] 91-22-662 22635
Abhishek Ghosh Engineering, Cement, Power Equipment, Logistics [email protected] 91-22-662 22658Nikhil Salvi Strategy, Mid-caps [email protected] 91-22-662 22566Jay Kale, CFA Automobiles, Auto ancillaries [email protected] 91-22-662 22529Dharmendra Sahu Database Analyst [email protected] 91-22-662 22580
Equity Sales/Dealing Designation E-mail Tel. 91-22-6622 2500
Anish Damania Head – Institutional Equities [email protected] 91-22-6622 2522 Ashish Kalra Managing Director, Sales [email protected] 91-22-6622 2525Rajesh Makharia Director, Sales [email protected] 91-22-6622 2528
Varun Saboo VP, Sales [email protected] 91-22-6622 2558 Arati Mishra VP, Sales [email protected] 91-22-6622 2597Hemal Ghia VP, Sales [email protected] 91-22-6622 2533Tanvi Dixit AVP, Sales [email protected] 91-22-6622 2595
Nirav Bhatt AVP, Sales [email protected] 91-22-6622 2681Chandan Asrani Manager, Sales [email protected] 91-22-6622 2540Sneha Baxi Manager, Sales [email protected] 91-22-6622 2537Samir Gilani Head of Trading [email protected] 91-22-6622 2535Mukesh Chaturvedi Director, Sales trading [email protected] 91-22-6622 2512
Viren Sompura SVP, Sales trading [email protected] 91-22-6622 2527Rajashekhar Hiremath SVP, Sales trading [email protected] 91-22-6622 2516
Alok Shyamsukha VP, Sales trading [email protected] 91-22-6622 2523
IDFC Securities US Designation E-mail TelephoneRavilochan Pola CEO [email protected] 001 646 756 5865
DisclaimerThis document has been prepared by IDFC Securities Ltd (IDFC SEC). IDFC SEC and its subsidiaries and associated companies are a full-service, integrated investment banking, investmentmanagement and brokerage group. Our research analysts and sales persons provide important input into our investment banking activities.This document does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.The information contained herein is from publicly available data or other sources believed to be reliable. While we would endeavor to update the information herein on reasonable basis, theopinions and information in this report are subject to change without notice and IDFC SEC, its subsidiaries and associated companies, their directors and employees (“IDFC SEC and affiliates”) are
under no obligation to update or keep the information current. Also, there may be regulatory, compliance, or other reasons that may prevent IDFC SEC and affiliates from doing so. Thus, theopinions expressed herein should be considered those of IDFC SEC as of the date on this document only. We do not make any representation either express or implied that information containedherein is accurate or complete and it should not be relied upon as such.The information contained in this document has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. This document is prepared forassistance only and is not intended to be and must not alone be taken as the basis for an investment decision. The investment discussed or views expressed in the document may not be suitablefor all investors. Investors should make their own investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in thisdocument (including the merits and risks involved) and investment decisions based upon their own financial objectives and financial resources. Investors assume the entire risk of any use made ofthe information contained in the document. Investments in general involve some degree of risk, including the risk of capital loss. Past performance is not necessarily a guide to future performanceand an investor may not get back the amount originally invested.Foreign currency-denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or the price of, or income derived from, the investment. Inaddition, investors in securities, the values of which are influenced by foreign currencies, effectively assume currency risk.
Affiliates of IDFC SEC may have issued other reports that are inconsistent with and reach different conclusions from, the information presented in this report.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 suchdistribution, publication, availability or use would be contrary to law, regulation or which would subject IDFC SEC and affiliates 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 a certain category of investors. Persons in whose possession this document may come are required toinform themselves of, and to observe, such applicable restrictions.Reports based on technical analysis centers on studying charts of a stock's price movement and trading volume, as opposed to focusing on a company's fundamentals and, as such, may notmatch with a report on a company's fundamentals.IDFC SEC and affiliates, their directors, officers, and employees may from time to time have positions in, purchase or sell, or be materially interested in any of the securities mentioned or relatedsecurities. IDFC SEC and affiliates may from time to time solicit from, or perform investment banking, or other services for, any company mentioned herein. Without limiting any of the foregoing, inno event shall IDFC SEC, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind including but notlimited to any direct or consequential loss or damage, however arising, from the use of thi s document. Any comments or statements made herein are those of the analyst and do not necessarilyreflect those of IDFC SEC and affiliates.This document is subject to changes without p rior notice and is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material and is not forany type of circulation. Any review, retransmission, or any other use is prohibited.Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. IDFC SEC will not treat recipients as customers by virtue of their receiving this report.IDFC Capital (USA) Inc. has reviewed the report and, to the extent that it includes present or past information, it is believed to be reliable, although its correctness cannot be assured.The analyst certifies that all of the views expressed in this research report accurately reflect his/her personal views about any and all of the subject issuer(s) or securities. The analyst certifies that nopart of her compensation was, is, or will be directly or indirectly related to the specific recommendation(s) and/or views expressed in this report.
Additional Disclosures of interest:1. IDFC SEC and its affiliates (i) may have received compensation from the company covered herein in the past twelve months for investment banking services; or (ii) may expect to receive or
intends to seek compensation for investment-banking services from the subject company in the next three months from publication of the research report.2. Affiliates of IDFC SEC may have managed or co-managed in the previous twelve months a private or public offering of securities for the subject company.3. IDFC SEC and affiliates collectively do not hold more than 1% of the equity of the company that is the subject of the report as of the end of the month preceding the distribution of the research report.4. IDFC SEC and affiliates are not acting as a market maker in the securities of the subject company.
Explanation of Ratings:1. Outperformer : More than 5% to Index2. Neutral : Within 0-5% (upside or downside) to Index3. Underperformer : Less than 5% to Index
Copyright in this document vests exclusively with IDFC Securities Ltd.
8/12/2019 MOTHERSON SUMI
http://slidepdf.com/reader/full/motherson-sumi 24/24
Motherson Sumi
www.idfc.com
IDFC SecuritiesNaman Chambers, C-32, 7 th floor,G- Block, Bandra-Kurla Complex,Bandra (East), Mumbai 400 051INDIA
Tel: +91 22 6622 2600Fax: +91 22 6622 2503
IDFC Capital (USA) Inc,350 5th Avenue,Suite 4711,New YorkNY 10118
Tel: +1 646 756 5864