Motherson Sumi climbs over 2%; Macquarie initiates coverage with 'outperform' rating

NEW DELHI: Shares of Motherson Sumi advanced on Wednesday after a foreign brokerage Macquarie initiated coverage on the stock with 'outperform' rating and set the target of Rs 400 per share, suggesting a potential upside of over 20 per cent from current levels.

The scrip was trading 3.75 per cent up at Rs 336.15 around 9.45 am (IST). It eventually ended 2.59 per cent higher at Rs 332.40 on BSE. Shares of the auto ancillary firm opened at Rs 327.95 and touched a high and low of Rs 338.90 and Rs 327.95, respectively.

According to Macquarie, consolidated revenue of the company could double over the next 3 years and high RoCE deserves valuation premium.

Motherson Sumi Systems on August 10 reported 20.95 per cent decline in consolidated net profit to Rs 347.32 crore for the first quarter ended June 30.

It had reported a consolidated net profit of Rs 439.36 crore in the same period last fiscal.

The company said during the quarter it had incurred an exceptional expense of Rs 150 crore as redemption premium and unamortised transaction costs for prepayment of senior secured notes amounting to 500 million euros due in 2021.

Shares of the company had hit their fresh 52-week high of Rs 345 on August 4, 2017 and 52-week low of Rs 185.43 on November 15, 2016.