ICICI Securities has a buy call on the MSSL (Montherson Sumi Systems Limited), the current market price (CMP) of which is reported to be Rs. 223.55. In the recent year, even during the ongoing pandemic situation, the company has shown good quarterly growth results, however, we also saw that various Mutual funds and asset management companies have decreased their shareholding, especially during the last quarter. Despite, all this, we also saw the Financial Institutional Investor (FII) has shown great interest in the company. Moreover, there has been a decline in promoter pledge and growth in the operating profit with an increase in the operating margin as well.
About Motherson Sumi Systems: Promoters & Financials
Motherson Sumi Systems Limited (MSSL) is a part of Motherson Group and is in fact a Joint venture between Japan’s Sumitomo Wiring Systems Ltd (SWS) and India’s Samvardhana Motherson International Ltd. The company was initial incorporated on 1st January 1986 and was founded by Vivek Chaand Sehgal and Smt. S. L. Sehgal. Meanwhile the DIIs and public & others hold 12.8% and 8.4% stake in the company. The company’s financial for 2020:
- Market Capitalisation: Rs. 70,864.04 Crore
- Total Assets: Rs. 45,495 Crore
- Operating Income: Rs. 2,654 Crore
- Net Income: Rs. 1,237 Crore
- P/E ratio: 33.13
- EPS (Earning Per Share): 6.77
- Dividend Yield (%): 0.59
As1.7% of 30th June 2021, the promoters has a substantial interest in the company and holds 61.7%, while the Financial Institutional Investors (FIIs) holds 17.1%. The market capitalisation of the Motherson Sumi is reported to be Rs. 70,864.04 Crore, while as of March 2020, the company has total assets of Rs.Rs. 45,495 Crore. The earning available to equity shareholders is Rs. 1,237 Crore, while the price-earning ratio of the company is 33.13.
Buy Motherson Sumi Systems: Target price
As per the technical analysts, there is a bearish trend that is currently going on in the market, however, in the coming year, after 1-year to be more precise, the stocks of Motherson are surely going to show a major increase. In the last 3 years, there has been an increase in the revenue of the company by 0.7%, however, we cannot ignore the -13.3% and -5.2% downfall in the company’s net profit and operating profit.
In the last one month, the underperformed Motherson Sumi system saw a down by -5.06% as compared to Nifty50 up by 3.78%. If we take a look at the shareholding pattern of MSSL, we saw that in the last quarter, promoter unpledged 0.52% of shares, while the total stakes reached 3.69% of promoter holding. MFs decreased from 10.11% to 9.72$ in the June 2021 quarter, and also the number of mutual funds schemes declined from 26 to 23.
We saw FII increased holding from 16.64% to 16.86%, while Institutional investors have decreased holding to 29.86%. In the past three months, the brokers and investors promoted the target price and ICICI securities have bought a call on MSSL with a target price of Rs. 312 and for which the market research analysts have suggested a time frame of one year.
