Mr Sehgal,chairman of MS gave interview on the VW and Maruti.
Posts in category Value Pickr
Motherson sumi : Recent opportunity to buy (22-09-2015)
Its a great company facing difficult times; it can be worth buying when news are bad for a good quality stock. But even at current price the stock is not cheap. Its still a expensive stock above 30 PE & with negative news of Maruti and VW there there growth will surely be impacted.
Yes but a good company to keep under watch after the recent correction.
Motherson sumi : Recent opportunity to buy (22-09-2015)
Shares of Motherson Sumi extended losses for second consecutive day,
falling over 8 percent intraday on Tuesday. The stock was at 52-week
low of Rs 239.65 per share and down 14 percent year-to-date due to
concerns around one of its biggest clients Volkswagen.
The German carmaker has been accused of cheating on diesel emission
tests in the USA and may face penalties of up to USD 18 billion.
CLSA maintains an underperform rating on the stock and warns of
adverse impact if Volkswagen’s regulatory issues spill over to Europe.
Currently, Motherson has a limited exposure to Volkswagen in the USA.
Volkswagen is a key customer for Motherson in Europe and sales to its
group contributed 44 percent of its consolidated revenue in FY15.
According to CLSA estimates, if Motherson’s revenue from Volkswagen
group declines by 10 percent, it could result in 6 percent downside to
FY17 consolidated earnings per share (EPS).
“We continue to remain cautious on Motherson shares given the slow
pace of Indian auto demand recovery and slower-than-expected margin
improvement.
We believe that these regulatory issues for VW Group will be an
additional overhang on the stock in the near term until more clarity
emerges,” CLSA says in a note.In a response to CNBC-TV18, management
of Motherson Sumi has said that the company has only two big plants in
USA and are not affected by VW issue in any manner.
However, trouble for the German car maker has spread to South Korea as
the country's environment ministry will conduct an investigation into
emissions of Volkswagen AG and Audi diesel cars after the firm
admitted rigging emissions tests on diesel-powered vehicles in the
United States.Meanwhile, Credit Suisse has already raised an alarm of
Motherson Sumi's slowdown in domestic business.
"Motherson’s near dominance with Maruti is reducing as the
four-wheeler manufacturer is decreasing its single vendor
concentration. Maruti is in process of enforcing its single vendor not
having more than 70 percent share. Hence, Motherson which enjoys 85
percent share in Maruti component parts will suffer," Credit Suisse
said.
Motherson sumi : Recent opportunity to buy (22-09-2015)
Thanks for bringing this up. It is good to wait for the dust to settle down and not a good idea to buy on the day it hits a 52 week low (unless some body did a fat finger trade). Its ok even if it means paying up an extra 10% for it.
Shaily Engineering Plastic (22-09-2015)
Can somebody explain what are the growth triggers from here? Is current capacity utilization that only growth avenue? If that's the case, looks fully valued.
Motherson sumi : Recent opportunity to buy (22-09-2015)
Typically a sell on a bad news for a fundamentally strong stock should be used to accumulate.
However, in this case it may be that these things might impact the company's revenues fundamentally. Some evaluation needs to be done on the impact. It may turn out to be a good opportunity based on the outcome.
In these situations a strong company will come back but will take time - example Titan. It is still struggling when compared to its previous growth rate/financial metrics.
How to find if Tax is paid by company properly or not (22-09-2015)
@nabilmoideen
Softwares by Ace Equity or Capital line or others can help you outwith specific queries.
Motherson sumi : Recent opportunity to buy (22-09-2015)
Motherson sumi needs no introduction to Floks here
Motherson Sumi today hit fresh 52 week low after one of it's main customer Volkswagon was caught in some irregularities for carbon emission in europe and may face the fine upto 18 billion dollars.
Moreover it's another main customer Maruti has change it's strategy of single vendor to multiple vendor to derisk the procurement. Maruti has stated it won't procure more than 70% of components from single vendor. Motherson sumi supplies 85% of Maruti components. ( source moneycontrol )
I think this provides the opportunity to load up the stock as it has hit fresh low amid the uncertanities listed.
It's a high quality management and always achieved it's five year projected targets.
Though management said it won't be much impacted with the volkswagon issue as it has only two plants in US.
Views invited by the fellow members.
Disc : Invested and added today @ 250 levels and forms 7% of portfolio
Skipper Ltd., distributing Power and Water, Is it a moat in making? (22-09-2015)
Skipper Limited:
Market Cap: 1519.40 Crores
Current Price: 149.5
Book Value: 29.70
Stock P/E: 16.41
Dividend Yield: 0.88%
Face Value 1.00
Return on capital employed: 30.11%
Debt to equity: 1.13
Interest Coverage: 15.09
Skipper is the market leader in power and water sectors, is among the fastest growing companies in the power Transmission & Distribution area, which offers huge potential that the management is confident of exploiting. Its all-encompassing presence in the value chain from angles to tower production and fasteners to EPC enhances cost efficiency, which coupled with market leadership will lead to better returns. The company plans to scale up each of its businesses with an asset-light model, and focus on increasing tower exports. It also plans to gain a strong foothold in monopoles, EPC and PVC pipes.
Skipper has strong presence in North East India in Power T&D and have 5 plants across India ( 2 in Howrah, 1 in Assam, 1 in Telangana, 1 in Bulandhshr).
Recently company has ventured in Water Distribution (PVC) as well. Currently, 80% sales is from Power T&D and PVC has 7% share in share. Company is expecting to increase PVC share in sales to 20% on expanding the PVC pipes business.
MY VIEWS:
a) Given thrust of government to increase power and electricity across India, Power distributors like Skipper will be benefitted and Hence, increase in sales.
b) Third largest capacity of TLT towers: Skipper by April’2015 will have total capacity of 1, 75,000 TPA (up from 1, 51,000 TPA) of tower manufacturing capacity. It is the third largest capacity post KEC & Kalpataru in the domestic space. It has three manufacturing plants in the state of West Bengal and assam. Given the huge capex plans in TLT infrastructure in the country, the demand for towers are expected to grow at rapid pace and Skipper is well placed to capture the opportunity. All the three manufacturing plants are approved by PGCIL. Also it will have added cost advantage due to same.
c) The Government’s thrust on water, irrigation, river management, improving sanitation, sewerage and urbanization the PVC pipes and fittings markets is expected to grow at much higher pace then its historical 8-10% CAGR rate and reach ~391 bn in FY19. Skipper’s PVC business will also increase with recent investment in Ahmedabad for same.
PS. I am tracking the stock and do not hold any share.
P. I. Industries Ltd. – A Unique Business Model can make it a Great Play on Agri & CSM Space (22-09-2015)
@madhug
I think you are late to catch on this. Management of almost all agrochemical firms have been indicating since last year of a slowdown in business. Dhanuka has slashed growth targets thrice over the last one year. The same is being echoed by research reports also