Edelweiss Securities, in its research report, says that the near-term outlook of Motherson Sumi remains unclear and difficult to ascertain. Given that capex cycle has peaked and the company has been focusing on free cash flow (FCF), it may not shy away from acquisitions like in 2009 when it acquired SMR, it said.
"While we do expect a cut in our earnings, given the fluidity of the situation we are in the process of evaluating the extent of cut. However, current valuations assume Motherson Sumi (MSS) will not be able to navigate the current crisis, which we believe is extreme risk aversion. We maintain 'BUY'," the brokerage said. The target price stands at Rs 143.
Post the coronavirus
outbreak, the correction in the auto index is now closer to that witnessed during the 2008 Global Financial Crisis (GFC) period, said HDFC Securities in its report dated March 16.
"The index is down 47 per cent currently against 55 per cent in 2008. Valuations of select two-wheeler and commercial vehicles (CV) stocks are approaching levels that were witnessed during the GFC. Any recovery in sales though will be dependent on several factors including extent of pass through of crude prices, BS-VI related price hikes, etc," the report added.