InvestorQ : How do you see the long term future of the Motherson Sumi stock?
manisha Kolvenkar made post

How do you see the long term future of the Motherson Sumi stock?

Crowny Pinto answered.
2 years ago

Over the last 20 years, Motherson Sumi is one company that has set grand targets for the future and has also successfully achieved them. Vivek Sehgal has a track record of achieving the seemingly impossible as the parts supplier to the world’s biggest carmakers.

Now, Motherson Sumi is targeting to grow its annual sales three-fold from the current $12 billion to $36 billion by 2025. Towards this end, Motherson will aggressively buy out distressed auto ancillary companies as they run out of cash. Not a bad strategy, after all!

Look at the track record. Since 2007, Motherson has completed more than 12 M&A transactions globally even snapping up firms twice its size. It is now an ancillary supermarket selling interior trims to wiring harnesses, bumper bars, door panels and even lighting.

The road ahead appears to be inorganic as 80% of its targeted revenues in next 5 years will come from acquisitions. But last few years have been tough. In 2015, Motherson set a target of net sales of $18 billion by 2020 but managed only $12 billion. Now he needs a big push.

Its customer list reads like a roster of pedigree and includes GM, JLR, BMW, Mercedes Benz, Volkswagen etc. This gives them a unique breadth of market but also makes its business model vulnerable to the vagaries of business cycles in the European markets.

Interestingly, Sehgal is not a great votary of electric cars. He believes that the internal combustion engines remain relevant for decades. That is an interest statement from the auto parts supplier to more than half the world.