Auto components major Motherson Sumi Systems Ltd (MSSL) on Friday said it has acquired a company in China called Nanchang JMCG Mekra Lang Vehicle Mirror for 33 million yuan which is about Rs 34 crore odd. The Chinese company manufactures automotive mirrors for passenger vehicles, commercial vehicles, etc.
Motherson's strategy in the past has been that the company acquire their own vendors to strengthen their own supply chain. This will help Motherson strengthen its position in the commercial vehicle market in China. So, perhaps, the company believe that the Chinese market is performing quite well. Also, commercial vehicles are definitely picking up.
The Chinese company manufactures automotive mirrors and it has a turnover of 131 million yuan, which is about 17 million euros in 2020. It is an existing key supplier of vision systems to the passenger car original equipment manufacturers (OEMs) in China, so positive acquisition coming through.
Morgan Stanley released a note on Motherson and maintained overweight with a target price of Rs 255. It said interactions with the management indicate that the semiconductor shortage situation is easing up in Malaysia.
It also mentioned that the stock trading at 23 times is inexpensive compared to the average of 28 times that the peers are trading. So, all of these put together could mean perhaps more upsides for Motherson Sumi.
Watch the accompanying video of CNBC-TV18’s Sonia Shenoy for more details.