MOSL: Morning India (29/December/17)-1. Motherson Sumi (Magical times ahead!) 2. Auto (Auto retails weak in certain markets rural sales healthy) 3. Telecom: RJio agrees to buy RCom’s wireless assets 4. Technology: Universal Exchanges license

​MOrning India (29/December/17): 1. Motherson Sumi (Magical times ahead!); 2. Auto (Auto retails weak in certain markets; rural sales healthy); 3. Telecom: RJio agrees to buy RCom’s wireless assets; 4. Technology: Universal Exchanges license

Today’s top research idea

Motherson Sumi: Magical times ahead! Supportive global trends | Strong growth visibility | Financial discipline

• MSS is in a sweet spot to benefit from the evolving disruptive global automotive trends, which would drive its next wave of growth. MSS is now entrenched in the virtuous cycle of 'scale begets scale', as it would significantly benefit from OEMs' focus on vendor consolidation.
  
• MSS has strong organic growth opportunities in both international and domestic markets, driven by an increase in content per vehicle, a strong order book and its entry in new markets/segments.
  
• Over the next 12-15 months, with bulk of SMP plants ramping up, we expect ~19% revenue CAGR to EUR5b by FY20 and EBITDA margin expansion of 450bp to ~11%.
  
• PKC would benefit from a) strong tailwind in US Class 8 trucks, b) ramp-up in China Truck and c) ramp-up in rolling stock, driving revenue CAGR of 15% (FY17-20E) and ~400bp EBITDA margin expansion to ~10.9% by FY20E.
  
• For MSS, we estimate consolidated revenue/EBITDA/PAT CAGR of 22%/30%/33.5% over FY17-20E. We initiate coverage with a Buy rating and a target price of INR458.