RESULT UPDATE
MOTHERSON SUMI SMP to drive margin recovery in FY21 SYSTEMS India Equity Research| Automobiles
COMPANYNAME Motherson Sumi’s (MSS) Q2FY20 EBITDA at INR13.2bn came 5% above EDELWEISS 4D RATINGS our estimate. Sustained weakness in India (fourth consecutive quarter of Absolute Rating BUY revenue decline) was offset by a strong performance in the global Rating Relative to Sector Outperform business, driven by SMP and PKC. Ramp up of the Keskemet plant Risk Rating Relative to Sector High remains on track, but Tuscaloosa continues to be troubled by lack of Sector Relative to Market Overweight skilled man power. We, however, believe that the worst is now behind and sustained ramp up of the three new plants (EUR1bn revenue at full capacity) is likely to be margin accretive. Management’s focus on higher MARKET DATA (R: MOSS.BO, B: MSS IN) content per vehicle, instead of mere revenue growth, is also encouraging. CMP : INR 134 Hence, we revise up FY20/21E EPS up 11.5/32.2%. Maintain ‘BUY’ with Target Price : INR 154 SOTP-based revised TP of INR154 (INR116 earlier). 52-week range (INR) : 179 / 91 Share in issue (mn) : 3,157.7
M cap (INR bn/USD mn) : 424 / 8,113 Q2FY20: SMP and PKC drive revenue Avg. Daily Vol.BSE/NSE(‘000) : 9,355.2 Consolidated revenue of INR159bn (up 5.4% YoY) came in line with our estimate as a
10% YoY increase in global revenue at INR141bn offset weakness in the India SHARE HOLDING PATTERN (%) business—revenue down 20% YoY. SMP continues to be a key driver of performance Current Q1FY20 Q4FY19 with revenue growing 20% YoY and EBITDA margin of 4.2% (up 150bps QoQ). PKC Promoters * 61.7 61.7 61.7 sustained strong performance —revenue up 12% YoY and EBITDA jumped 300bps YoY MF's, FI's & BK’s 13.5 11.1 9.7 to 11.7%. Consolidated PAT of INR3.8bn was, however, 18% below our estimate due to FII's 14.9 16.4 18.1 significantly higher interest and D&A. Others 9.8 10.8 10.4 * Promoters pledged shares : NIL SMP margin recovery in FY21; India outlook subdued (% of share in issue)
Though India business continues to face macro headwinds, we expect it to benefit from PRICE PERFORMANCE (%) the BS VI transition (rise in content). Besides that, as the three new plants ramp up and cost control measures gather pace in SMP, margin and ROCE will get a boost in FY21. Stock Nifty EW Auto Index
Also, with the capex cycle behind, we expect FCF to improve even in a weak demand 1 month 31.8 7.0 11.5 environment. 3 months 31.4 7.9 16.6 12 months (24.6) 12.4 (11.4)
Outlook and valuation: Franchise remains strong; maintain ‘BUY’
We like MSS’ strong India franchise as well as the SMR business. We estimate FY19–21 EPS CAGR of 28%. We maintain ‘BUY/SO’ with TP of INR154 (valuing India business at 25x, SMR/SMP/PKC at 14x March 2021E PE). The stock is trading at 21.3/15.9x FY20/21E PE.
Financials (INR mn) Chirag Shah Year to March Q2FY20 Q2FY19 % Chg Q1FY20 % Chg FY19 FY20E FY21E +91 22 6623 3367 Net revenues 159,242 151,050 5.4 167,925 (5.2) 635,229 720,357 802,349 [email protected] EBITDA 13,190 13,001 1.5 12,550 5.1 53,484 53,964 68,734 Adjusted Profit 3,846 3,711 3.6 3,315 16.0 16,132 19,804 26,533 Jay Mehta +91 22 4088 6072 Adjusted Diluted EPS 1.8 1.2 55.5 1.6 16.0 5.1 6.3 8.4 [email protected]
Diluted P/E (x) 26.1 21.3 15.9 EV/EBITDA (x) 16.4 17.0 12.5 ROAE (%) 15.4 15.5 19.5 November 11, 2019
Edelweiss Research is also available on www.edelresearch.com, Edelweiss Securities Limited Bloomberg EDEL
Automobiles
Q2FY20 conference call: Key highlights
Highlights Won new orders worth EUR3.8bn in Q2FY20.
No reduction / cut in new orders from customers.
Most of the capex is now done. Does not expect any more green field projects.
Post BS VI (India), content per vehicle in CVs will increase by double digits.
M&A: Multiple moving parts, so difficult to commit a timeline. But hoping to close an acquisition in the current quarter. Valuations of potential targets look attractive in this environment.
USA is now the second-largest country by revenue (after Germany).
SMRPBV accounts for more than 45% of the consolidated working capital.
Capex: Original FY20 guidance of INR20bn has been retained, though trying to lower the actual spend.
SMR/SMP SMRC remains profitable.
Working to improve profitability of green-field plants.
Keskemet (Hungary) is ahead of Tuscaloosa (Alabama) in terms of utilisation and expects it to breakeven soon.
Management team at Hungary is more mature and stable compared to Alabama. Man- power problems are also not significant in Hungary.
Tuscaloosa update
1. Primary focus is to ensure supply that OEM requires, profitability improvement will come in focus after that. That said, it is not that the company is not taking measures to improve profitability.
2. Now producing 1,000 cars a day versus 600 cars at the end of previous quarter. Working to improve production capacity further to achieve breakeven. Will then focus on profitability.
3. Man power problems persist at Tuscaloosa. Shortage of skilled man-power still persists and MSS will need to hire many more people than originally estimated.
4. The company is working with the government and training existing employees to overcome this challenge. However, resolution of this problem is taking longer than expected.
5. By March, will make a much bigger push towards profitability, once ongoing orders are fulfilled.
6. Next quarter supply to Diamler is expected to grow in double digits QoQ.
Utilisation – Running Tuscaloosa plant for six days a week with one day of maintenance. As utilisation/efficiency improves, will be able to run on five days a week.
2 Edelweiss Securities Limited Motherson Sumi Systems
SMRPBV Order book continues to remain strong with orders which have yet to commence.
Rolling stock business (in PKC) Operational performance of this business has improved as they imbibe good practices from the existing group and as China has stabilised.
Already has a plant at Serbia, which the company is expanding.
Setting up a new plant in UAE.
Table 1: SOTP valuation March 2021e EPS Target Multiple (PE) Value per share India 2.8 25.0 70 SMR 1.0 14.0 13 SMP 1.6 14.0 22 PKC 2.2 14.0 30 Others 0.9 20.0 18 Total 8.4 18.3 154 Source: Edelweiss research
3 Edelweiss Securities Limited Automobiles
Table 2: Key assumptions (INR mn) FY19 % YoY FY20E % YoY FY21E % YoY Net Sales 6,35,229 12.8 7,20,357 13.4 8,02,349 11.4 MSS 75,813 1.7 70,933 (6.4) 79,641 12.3 SMR 1,27,807 7.5 1,30,790 2.3 1,35,993 4.0 SMP 2,82,394 8.4 3,72,832 32.0 4,32,562 16.0 PKC 93,745 18.9 1,06,042 13.1 1,12,405 6.0 Others 55,470 84.5 39,760 (28.3) 41,748 5.0
EBITDA 53,484 25.4 53,964 0.9 68,734 27.4 MSS 12,728 (8.0) 11,374 (10.6) 13,814 21.5 SMR 14,507 5.4 13,554 (6.6) 13,961 3.0 SMP 12,646 (18.6) 12,481 (1.3) 23,922 91.7 PKC 8,292 51.0 12,167 46.7 13,489 10.9 Others 5,311 (189.4) 4,387 (17.4) 3,549 (19.1)
Margin (%) 8.4 7.5 8.6 MSS 16.8 16.0 17.3 SMR 11.4 10.4 10.3 SMP 4.5 3.3 5.5 PKC 8.8 11.5 12.0 Others 9.6 11.0 8.5
APAT 16,132 (6.1) 19,804 22.8 26,533 34.0 MSS 8,138 (7.4) 7,186 (11.7) 8,877 23.5 SMR 3,577 4.2 3,031 (15.3) 3,028 (0.1) SMP 1,366 (51.2) 1,135 (16.9) 4,898 331.4 PKC 3,602 34.0 6,306 75.1 6,815 8.1 Others -552 3.0 2,146 (488.9) 2,915 35.8
EPS 5.1 (6.1) 6.3 22.8 8.4 34.0 MSS 2.6 (7.4) 2.3 (11.7) 2.8 23.5 SMR 1.1 4.2 1.0 (15.3) 1.0 (0.1) SMP 0.4 (51.2) 0.4 (16.9) 1.6 331.4 PKC 1.1 34.0 2.0 75.1 2.2 8.1 Others (0.2) 3.0 0.7 (488.9) 0.9 35.8 Source: Company, Edelweiss research
4 Edelweiss Securities Limited Motherson Sumi Systems
Chart 1: SMR revenue growth trend Chart 2: SMP revenue growth trend 450 23.0 1,000 45.0
410 17.0 800 33.0
370 11.0 600 21.0
400 9.0 YoY) (% (% YoY) (%
330 5.0 Mn) (Euro (Euro Mn) (Euro 200 (3.0) 290 (1.0) 0 (15.0)
250 (7.0)
17 18 19 17 17 17 18 18 18 19 19 20 20
17 17 17 17 18 18 18 18 19 19 19 20 20
FY FY FY FY FY FY FY FY FY FY FY FY FY
2 3 4 1 3 4 1 2 4 2 3 1 2
FY FY FY FY FY FY FY FY FY FY FY FY FY
Q Q Q Q Q Q Q Q Q Q1FY19 Q Q Q Q
1 2 3 4 1 2 3 4 1 2 3 1 2
Q Q Q Q Q Q Q Q Q Q Q Q4FY19 Q Q SMP revenues YoY change (RHS) SMR revenues YoY change (RHS)
Chart 3: PKC revenue and margins trend Chart 4: Domestic revenue growth trend 350 12.0 25,000 100.0
280 10.8 20,000 75.0
210 9.6 15,000 50.0 (%)
140 8.4 YoY) (%
(Euro Mn) (Euro 10,000 25.0 (INR mn) (INR
70 7.2 5,000 0.0
0 6.0
0 (25.0)
18 18 18 18 19 19 19 19 20 20
18 17 17 18 19 19 20
FY FY FY FY FY FY FY FY FY FY
1 2 3 4 1 2 3 4 1 2
FY FY FY FY FY FY FY
1 1 3 3 1 3 1
Q Q Q Q Q Q Q Q Q Q
Q Q Q Q Q Q Q PKC revenues EBITDA margin India YoY
Chart 5: SMR/SMP margin trend 15.0
12.0
9.0
6.0
EBITDA Margin (%) Margin EBITDA 3.0
0.0
17 17 17 18 18 18 18 19 19 19 20 17 20
FY FY FY FY FY FY FY FY FY FY FY FY FY
1 2 4 1 2 3 4 2 3 4 1 3 2
Q Q Q Q Q Q Q Q Q Q Q Q Q1FY19 Q SMP SMR Source: Company reports, Edelweiss research
5 Edelweiss Securities Limited Automobiles
Financial snapshot (INR mn) Year to March Q2FY20 Q2FY19 % change Q1FY20 % change YTD20 FY20E FY21E Net revenues 159,242 151,050 5.4 167,925 (5.2) 327,167 720,357 802,349 Raw material costs 91,300 87,458 4.4 96,586 (5.5) 187,886 437,983 477,260 Staff costs 36,311 32,775 10.8 39,171 (7.3) 75,482 151,275 168,493 Other expenses 18,440 17,817 3.5 19,619 (6.0) 38,059 77,135 87,862 EBITDA 13,190 13,001 1.5 12,550 5.1 25,740 53,964 68,734 Depreciation 5,686 3,984 42.7 5,522 3.0 11,208 20,208 21,388 EBIT 7,504 9,017 (16.8) 7,028 6.8 14,532 33,756 47,347 Interest 1,254 1,315 (4.7) 1,559 (19.6) 2,813 4,232 4,232 Other income 825 463 78.1 547 50.7 1,373 2,481 3,021 Add: Exceptional items Profit before tax 6,211 7,269 (14.6) 5,173 20.1 11,384 32,005 46,137 Provision for taxes 1,869 2,577 (27.5) 1,774 5.3 3,643 9,602 13,841 Minority interest 732 1,244 (41.1) 291 151.7 1,023 4,100 7,712 Associate profit share 237 262 (9.8) 207 14.1 444 1,500 1,950 Reported net profit 3,846 3,711 3.6 3,315 16.0 7,161 19,804 26,533 Adjusted Profit 3,846 3,711 3.6 3,315 16.0 7,161 19,804 26,533 Diluted shares (mn) 2,105 3,158 2,105 - 3,158 3,158 Adjusted Diluted EPS 1.8 1.2 55.5 1.6 16.0 - 6.3 8.4 Diluted P/E (x) - - - - 21.3 15.9 EV/EBITDA (x) - - - - 17.0 12.5 ROAE (%) - - - - 15.5 19.5
As % of net revenues Raw material 57.3 57.9 57.5 57.4 60.8 59.5 Employee cost 22.8 21.7 23.3 23.1 21.0 21.0 Other expenses 11.6 11.8 11.7 11.6 10.7 11.0 EBITDA 8.3 8.6 7.5 7.9 7.5 8.6 Adjusted net profit 2.4 2.5 2.0 2.2 2.7 3.3 Reported net profit 2.4 2.5 2.0 2.2 2.7 3.3 Tax rate 26.4 31.6 29.5 27.8 30.0 30.0
Change in Estimates FY20E FY21E New Old % change New Old % change Comments Net Revenue 720,357 704,837 2.2 802,349 763,457 5.1 EBITDA 53,964 51,603 4.6 68,734 57,897 18.7 EBITDA Margin 7.5 7.3 8.6 7.6 Adjusted Profit 19,804 17,768 11.5 26,533 20,071 32.2 After Tax Net Profit Margin 3.3 3.1 4.3 3.4 Capex 18,428 18,428 0.0 18,428 18,428 0.0
6 Edelweiss Securities Limited Motherson Sumi Systems
Company Description Motherson Sumi Systems (MSS), is a JV between Samvardhana Motherson International (SMIL) and Sumitomo Wiring Systems, Japan (SWS). It is the flagship company of Samvardhana Motherson Group (SMG). With presence in 25 countries and turnover of ~USD6.5 bn as of FY17, the group supplies to all major automobile manufacturers across the world.
MSS can be regarded as inorganic growth specialist. Pertinently, the company has successfully turned around its recent two key acquisitions, SMR and SMP. Its latest acquisition of PKC, a Finland based M&HCV wiring harness player remains well placed to capitalised on growth across US and Europe geographies
Investment Theme Historically, MSS’s revenue and profits have catapulted ~5x every 5 years driven by rising content per vehicle, diversified geography & clients and acquisitions. Our analysis of successful global leaders—Bosch, Johnson Control, Magna—indicates acquisitions have been integral to growth; MSS is treading the same path.
We believe the India business is well placed to benefit from rising content per vehicle with upcoming safety and BS-VI emission norms. Though revenue visibility for the SMR and SMP business is improving, the pace of ramp up at new plants remains key to margin improvement.
Key Risks Complex structure raises concerns MSS has too many subsidiaries/JVs, which complicates the ownership structures.
Weaker global demand The company’s key subsidiaries (SMR/SMP) are highly dependent on demand from the luxury car segment. Weakness in global premium car demand can impact order books of SMR/SMP. This in turn could delay expected turnaround in these subsidiaries.
Execution risks Delays in turnaround of subsidiaries and/or lower-than-anticipated group synergies remain a concern for SMR/SMP.
7 Edelweiss Securities Limited Automobiles
Financial Statements Key Assumptions Income statement (INR mn) Year to March FY18 FY19 FY20E FY21E Year to March FY18 FY19 FY20E FY21E Macro Income from operations 562,933 635,229 720,357 802,349 GDP(Y-o-Y %) 6.7 7.1 7.1 7.3 Materials costs 343,121 367,383 437,983 477,260 Inflation (Avg) 3.6 4.5 4.5 4.5 Employee costs 110,678 141,694 151,275 168,493 Repo rate (exit rate) 6.0 6.8 6.8 5.8 Total SG&A expenses 57,908 72,668 77,135 87,862 USD/INR (Avg) 64.5 70.0 72.0 72.0 Total operating expenses 511,707 581,745 666,393 733,615 Sector EBITDA 51,226 53,484 53,964 68,734 4W - domestic vol (% YoY) 9.0 9.0 10.0 10.0 Depreciation 15,752 20,582 20,208 21,388 2W - domestic vol (% YoY) 11.0 10.0 10.0 10.0 EBIT 35,474 32,902 33,756 47,347 Company Less: Interest Expense 4,108 4,232 4,232 4,232 Cost assumptions Add: Other income 1,700.9 2,201.8 2,480.58 3,021.43 Financial assumptions Profit Before Tax 31,290 30,872 32,005 46,137 Variable expenses (% sales) 3.0 3.4 3.2 3.2 Less: Provision for Tax 10,072 11,022 9,602 13,841 Fixed expenses (% sales) 4.3 4.2 4.5 4.8 Less: Minority Interest 6,629 4,850 4,100 7,712 Avg. Interest rate (%) 4.3 2.8 2.8 2.8 Add: Exceptional items (1,777) - - - Depreciation rate (%) 10.1 10.9 10.0 9.7 Associate profit share 1,381 1,131 1,500 1,950 B/S assumptions Reported Profit 15,970 16,132 19,804 26,533 Tax rate (%) 32.2 31.5 31.5 31.5 Exceptional Items (1,205) - - - Dividend payout (%) 35.7 35.0 35.0 35.0 Adjusted Profit 17,175 16,132 19,804 26,533 Capex (INR mn) (30,621) (19,977) (20,180) (20,180) Shares o /s (mn) 3,158 3,158 3,158 3,158 Net borrowings (INR mn) 57,652 12,202 (22,812) (66,448) Adjusted Basic EPS 5.4 5.1 6.3 8.4 Debtor days 45 41 43 43 Diluted shares o/s (mn) 3,158 3,158 3,158 3,158 Inventory days 38 39 38 38 Adjusted Diluted EPS 5.4 5.1 6.3 8.4 Payable days 141 147 142 143 Adjusted Cash EPS 10.4 11.6 12.7 15.2 Cash conversion cycle (59) (66) (61) (62) Dividend per share (DPS) 1.3 1.5 1.9 2.5 Dividend Payout Ratio(%) 32.4 35.4 35.0 35.0
Common size metrics Year to March FY18 FY19 FY20E FY21E Materials costs 61.0 57.8 60.8 59.5 Staff costs 19.7 22.3 21.0 21.0 S G & A expenses 10.3 11.4 10.7 11.0 Operating expenses 90.9 91.6 92.5 91.4 Depreciation 2.8 3.2 2.8 2.7 Interest Expense 0.7 0.7 0.6 0.5 EBITDA margins 9.1 8.4 7.5 8.6 Net Profit margins 4.2 3.3 3.3 4.3
Growth ratios (%) Year to March FY18 FY19 FY20E FY21E Revenues 32.5 12.8 13.4 11.4 EBITDA 19.6 4.4 0.9 27.4 PBT 7.9 (1.3) 3.7 44.2 Adjusted Profit 5.9 (6.1) 22.8 34.0 EPS 5.9 (6.1) 22.8 34.0
8 Edelweiss Securities Limited Motherson Sumi Systems
Free cash flow (INR mn) Profitability and efficiency ratios Year to March FY18 FY19 FY20E FY21E Year to March FY18 FY19 FY20E FY21E Reported Profit 15,970 16,132 19,804 26,533 ROAE (%) 20.4 15.4 15.5 19.5 Add: Depreciation 15,752 20,582 20,208 21,388 ROACE (%) 17.3 14.7 13.8 17.7 Interest (Net of Tax) 2,786 2,721 2,962 2,962 Inventory Days 38 43 40 40 Others 11,423 4,648 5,369 8,982 Debtors Days 45 40 39 38 Less: Changes in WC 13,290 958 1,080 1,057 Payable Days 141 163 151 150 Operating cash flow 32,640 43,124 47,263 58,808 Cash Conversion Cycle (59) (79) (73) (72) Less: Capex 30,621 27,627 18,428 18,428 Current Ratio 1.3 1.3 1.5 1.6 Free Cash Flow 2,019 15,497 28,835 40,380 Gross Debt/EBITDA 1.9 2.0 2.0 1.6 Gross Debt/Equity 0.7 0.8 0.7 0.6
Cash flow metrics Adjusted Debt/Equity 0.7 0.8 0.7 0.6 Year to March FY18 FY19 FY20E FY21E Net Debt/Equity 0.4 0.4 0.2 (0.1) Operating cash flow 32,640 43,124 47,263 58,808 Interest Coverage Ratio 8.6 7.8 8.0 11.2 Financing cash flow (22,214) (2,246) (11,153) (13,505)
Investing cash flow (31,941) (33,105) (5,609) (2,154) Operating ratios Net cash Flow (21,515) 7,773 30,501 43,149 Year to March FY18 FY19 FY20E FY21E Capex (30,621) (27,627) (18,428) (18,428) Total Asset Turnover 2.7 2.7 2.8 2.9 Dividend paid (6,332) (6,395) (6,922) (9,273) Fixed Asset Turnover 4.2 3.9 4.1 5.0 Equity Turnover 4.8 4.7 4.7 4.6
Valuation parameters Year to March FY18 FY19 FY20E FY21E Adj. Diluted EPS (INR) 5.4 5.1 6.3 8.4 Y-o-Y growth (%) 5.9 (6.1) 22.8 34.0 Adjusted Cash EPS (INR) 10.4 11.6 12.7 15.2 Diluted P/E (x) 24.7 26.3 21.4 16.0 EV / Sales (x) 1.7 1.5 1.4 1.1 EV / EBITDA (x) 8.3 7.9 7.9 6.2 Dividend Yield (%) 1.0 1.1 1.4 1.9
Peer comparison valuation Market cap Diluted P/E (X) EV / EBITDA (X) ROAE (%) Name (USD mn) FY20E FY21E FY20E FY21E FY20E FY21E Motherson Sumi Systems - 21.4 16.0 7.9 6.2 15.5 19.5 Amara Raja Batteries 1,715 18.6 16.1 10.7 9.0 18.4 18.6 Ashok Leyland 3,253 20.5 16.2 11.5 9.3 13.6 17.1 Exide Industries 162,010,000 17.1 15.9 10.4 9.3 15.1 14.7 Maruti Suzuki India Ltd 2,155,464,600 34.3 25.5 19.8 14.1 13.2 16.4 Suprajit Engineering 24,183,523 18.7 17.3 11.2 10.2 15.6 14.9 Median - 19.6 16.2 11.0 9.3 15.3 16.7 AVERAGE - 21.8 17.8 11.9 9.7 15.2 16.9 Source: Edelweiss research
9 Edelweiss Securities Limited Automobiles
Additional Data Directors Data Vivek Chaand Sehgal, Chairman Non-Executive Director Laksh Vaaman Sehgal Non-Executive Director Toshimi Shirakawa Non-Executive Director Pankaj Mittal Executive Director S.C. Tripathi, IAS (retd.) Non-Executive Independent Director Arjun Puri Non-Executive Independent Director Gautam Mukherjee Non-Executive Independent Director Naveen Ganzu Non-Executive Independent Director Geeta Mathur Non-Executive Independent Director Noriyo Nakamura Non-Executive Director
Auditors - Price Waterhouse *as per last annual report
Holding – Top10 Perc. Holding Perc. Holding Samvardhana motherso 33.43 Sumitomo wiring syst 25.1 Icici prudential ass 4.82 Sehgal vivek chaand 2.32 Sbi funds management 1.69 Axis asset managemen 1.37 Vanguard group 1.1 Blackrock 1.02 Reliance capital tru 0.95 Hermes investment ma 0.91
*in last one year
Bulk Deals Data Acquired / Seller B/S Qty Traded Price
No Data Available
*in last one year
Insider Trades Reporting Data Acquired / Seller B/S Qty Traded
No Data Available
*in last one year
10 Edelweiss Securities Limited RATING & INTERPRETATION
Company Absolute Relative Relative Company Absolute Relative Relative reco reco risk reco reco Risk Amara Raja Batteries BUY None None Ashok Leyland BUY SO H Bajaj Auto HOLD SU L Ceat Ltd HOLD SP None Eicher Motors BUY SO M Exide Industries BUY None None Hero MotoCorp HOLD SU H Mahindra & Mahindra Ltd BUY SO M Maruti Suzuki India Ltd REDUCE SU H Minda Corporation BUY SO M Motherson Sumi Systems BUY SO H Suprajit Engineering HOLD None H Tata Motors Ltd HOLD SP H
ABSOLUTE RATING
Ratings Expected absolute returns over 12 months
Buy More than 15%
Hold Between 15% and - 5%
Reduce Less than -5%
RELATIVE RETURNS RATING
Ratings Criteria Sector Outperformer (SO) Stock return > 1.25 x Sector return
Sector Performer (SP) Stock return > 0.75 x Sector return
Stock return < 1.25 x Sector return
Sector Underperformer (SU) Stock return < 0.75 x Sector return
Sector return is market cap weighted average return for the coverage universe within the sector
RELATIVE RISK RATING
Ratings Criteria
Low (L) Bottom 1/3rd percentile in the sector
Medium (M) Middle 1/3rd percentile in the sector
High (H) Top 1/3rd percentile in the sector
Risk ratings are based on Edelweiss risk model
SECTOR RATING
Ratings Criteria Overweight (OW) Sector return > 1.25 x Nifty return
Equalweight (EW) Sector return > 0.75 x Nifty return
Sector return < 1.25 x Nifty return
Underweight (UW) Sector return < 0.75 x Nifty return
11 Edelweiss Securities Limited Automobiles
Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098. Board: (91-22) 4009 4400, Email: [email protected]
Aditya Narain
Head of Research [email protected]
Coverage group(s) of stocks by primary analyst(s): Automobiles Ashok Leyland, Amara Raja Batteries, Bajaj Auto, Ceat Ltd, Eicher Motors, Exide Industries, Hero MotoCorp, Minda Corporation, Mahindra & Mahindra Ltd, Maruti Suzuki India Ltd, Motherson Sumi Systems, Suprajit Engineering, Tata Motors Ltd
Recent Research
Date Company Title Price (INR) Recos
11 -Nov-19 Ashok Inventory, cost control absorb 77 Buy Leyland bumps; Result Update 11-Nov-19 Amara Raja Well charged; 654 Buy Batteries Result Update 08-Nov-19 Mahindra & Strong core; subsidiaries 581 Buy Mahindra disappoint; Result Update
Distribution of Ratings / Market Cap Edelweiss Research Coverage Universe Rating Interpretation
Buy Hold Reduce Total Rating Expected to
Rating Distribution* 161 67 11 240 Buy appreciate more than 15% over a 12-month period * 1stocks under review Hold appreciate up to 15% over a 12-month period > 50bn Between 10bn and 50 bn < 10bn 743 Reduce depreciate more than 5% over a 12-month period Market Cap (INR) 156 62 11 594
One year price chart 446 180
(INR) 297 160
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12 Edelweiss Securities Limited
Motherson Sumi Systems
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Automobiles
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