Event Update: Motherson Sumi Systems Ltd - ACCUMULATE - TP Rs.348 - Kotak

MSSL, through its step down subsidiary Samvardhana Motherson Automotive Systems Group B.V. (SMRP BV), announced the proposed acquisition of Reydel Automotive Group (Reydel), a privately held portfolio company of Cerberus Capital Management, L.P. (Cerberus) for a purchase price of $201mn. In our view, this deal helps MSSL move a step forward towards achieving its vision 2020 revenue target of $18bn, further scale its interiors business and opens up new markets. Prima facie, the transaction valuation of 2x EV/EBITDA looks attractive for a company with 25% RoCE, net cash and positive free cash generation. Since our previous update, the stock price of MSSL is down by 10%. We thereby upgrade the stock to ACCUMULATE (from SELL earlier) with unchanged price target of Rs348.

Shares of MOTHERSON SUMI SYSTEMS LTD. was last trading in BSE at Rs.333.1 as compared to the previous close of Rs. 332.6. The total number of shares traded during the day was 193581 in over 2276 trades.

The stock hit an intraday high of Rs. 339.1 and intraday low of 332.5. The net turnover during the day was Rs. 65049330.

Source : Equity Bulls

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