Auto Ancillaries Stock Gets Buy Call From ICICI Securities For Target Price Of Rs 100, Return 23%

ICICI Securities has assigned buy call to the stock of Motherson Sumi Wiring India Ltd with a target price of Rs 100 apiece. If you buy Motherson Sumi at its current market price of Rs 81 (on BSE), you can get a potential return of 23%.

Motherson Sumi Wiring India Limited (MSWIL) is a beneficiary of Indian automotive premiumisation and electrification other than its volume growth being correlated to long-term OEM volume CAGR of ~6-7%. Check key takeaways below:

1. Motherson Wiring Stock Performance

The current market price of the stock is Rs 81 apiece with 52-week high at Rs 94 apiece and 52-week low at Rs 56 apiece, respectively. The company has a market capitalisation of Rs 25,595.06 crore.

2. Motherson Wiring Return

The stock has given a return of 31% in last 1-year, 20% in last 6-months, and 2% in last 3 months.

3. Motherson Wiring Valuation

According to ICICI Securities, "We Initiate coverage with BUY: We initiate coverage on the stock with BUY rating and DCF-based target price of Rs100, implying ~30x FY25E EPS (~40x FY24E EPS) amid ~38%/~30% earnings/FCF CAGR in FY22-FY25E. We believe the recent weakness in MSWIL's profitability is giving scope to enter high RoCE and FCF generating entity compared to peers in domestic auto ancillary space. With portfolio being EV agnostic, debt free balance sheet, ~40-50% payout ratio and visibility of RoCE sustaining above 50% should drive the sustenance of premium valuation multiples for MSWIL."

4. About Motherson Wiring

Motherson Sumi Wiring India Limited (MSWIL), a JV between Motherson Sumi (MSSL: ~33.4% stake) and Sumitomo Wiring Systems, Japan (SWS: ~25.3% stake), is the domestic WH business of the erstwhile Motherson Sumi Systems established in 1986.

MSWIL has 23 facilities and employs over 40,000 people and was listed on the Indian stock exchanges following MSSL's re-organisation exercise led vertical demerger.

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.