NSE Code: MOTHERSUMI
Motherson Sumi has made a 52 weeks low of 113.7 this levels come as short term support for MSSL counter, it is beaten down stock and is getting hammered from Aug 2018 when it was trading at high of 218.5, in between it tried to recover but was unable to break it’s new resistance of 175.1 MSSL attempted this level for 4 times from Oct 2018 till March 2019 ultimately given up and again started its downward journey.
In daily chart a short term resistance is coming anywhere between 127.2 and 128.7 with first support of 114 and second support of 110.7
FY19 Q2 missed estimates as profit dipped to 15% YoY due to margin contracts over startup costs i.e. the expenses incurred due to setting up of new plant of Rs. 166 crore.
MSSL cater to Volkswagen, Daimler and BMW groups as clients.
As per Chairman Mr. Sehgal “MSSL has opened 21 companies in last 3yrs at profitable rate, he said we are in almost last leg of pain in growth of Motherson for the growth of new plants”.
But the pain continues on the worries that weak demand in key markets, regulatory restrictions on emission, higher investments will impact MSSL
Uncertainties such as Brexit and trade war between US and China is also impacting MSSL growth along with commissioning of three new plants coincided with the near-term demand weakness, thereby putting pressure on margins.
The pain for MSSL does not end here it continue with the fall in US Class 8 trucks orders a slowdown in US commercial vehicle (CV) sales this is the sixth consecutive month of sales drop, significant part of the revenue comes from CV sales.
Valuation of auto component maker MSSL will be under pressure beaten down to almost 14% from December.
The slowdown in global auto sales is another factor responsible for this correction.
Positives are MSSL ability to sustain profit in challenging times in global and domestic market is commendable.[/vc_column_text][/vc_column][/vc_row]