Shares of Motherson Sumi Wiring India hit their 5 percent lower circuit at ₹59.60 in early trade on BSE on March 29 a day after it was listed on exchange.
Motherson Sumi Wiring India was created as a result of a restructuring exercise to align the interests of major stakeholders, including Sumitomo Wiring Systems. The company, along with Samvardhana Motherson International, is the market leader in the domestic PV wiring harness segment with an estimated share of more than 60 percent.
Brokerage firm Emkay Global reduced its FY23E/24E EBITDA assumptions by 6 percent/5 percent, factoring in cost pressures.
"We had earlier published Motherson Sumi Wiring estimates in the Samvardhana Motherson International Q3FY22 result note. Following the revision, we build in revenue/EBITDA CAGRs of 23 percent/24 percent over FY22-24E, supported by an auto sales upcycle and increasing CPV," said Emkay.
"The stock trades at a price to earnings ratio (P/E) of 31 times on FY23E EPS. We recommend buy with a DCF-based target price of ₹85 (earlier ₹95), implying a multiple of 35 times on FY24E EPS (earlier 37 times). The reduction in the target multiple is due to lower growth estimates in the DCF model," said the brokerage.
Slower demand recovery/supply issues in PV industry, weak performance of large clients, and increase in commodity prices are the key risks, the brokerage said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
