The board of auto parts maker has fixed the record date for the scheme of arrangement as Monday, January 17. According to the stock exchange intimation, existing Motherson stock will trade ex-domestic wiring harness from Friday.
Following the update, shares of Motherson Sumi System dropped 22.12 per cent to Rs 182.85 on Friday (14 Jan, 2022) on NSE. The scrip had settled at Rs 234.80 on Thursday.
Benchmark index and BSE barometer Sensex was trading 253.24 points or 0.41 per cent lower at 60,982.06 at the time of writing this report.
Under the proposed restructuring, the domestic wiring harness business will be demerged from the existing entity and listed separately by March.
The demerged entity would be called Motherson Sumi Wiring India (MSWIL). The existing company, Motherson Sumi Systems, will be merged into promoter-held Samvardhana Motherson International (SAMIL).
Shareholders will get one share of each of the demerged and existing entities.
“We value the combined entity post-merger of erstwhile SAMIL into MSSL at Rs 270 on SOTP basis. Consequently, our target for individual entities i.e. DWH and new SAMIL (ex-DWH) is at Rs 70 and Rs 200, respectively. Given the high RoCE profile (nearly 40 per cent) and exposure to pure-play domestic PV wiring harness segment at DWH, we assign a premium valuation to it at 40 times PE on FY23 against new SAMIL being valued at 26 times PE on FY23,” ICICIdirect said in a January 10 note.
According to an
ETIG report, the fair value of SAMIL is pegged between Rs 170-230 per share, while that of the domestic wiring harness is estimated at Rs 60-80 apiece. The demerger will help simplify the group structure and create a stronger platform for growth. It will result in value accretion of 5 per cent based on the trailing 12-month financial performance of the two entities, the report added.