Recommendations From Computers - Software & Auto Ancillaries Sectors

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations. 

FIRSTSOURCE SOLUTIONS LIMITED 

CMP - Rs 56.10
BSE CODE : 532809
Volume :7,17,248
Face Value : Rs 10
Target : Rs 61
Stoploss : Rs 51.50 (CLS)

Firstsource Solutions is the provider of a range of business process management services across a customer’s lifecycle delivered through transaction processing. Its product portfolio includes productised solutions in customer interaction analytics (First Customer Intelligence), web chat (First Chat), process automation (First Smartomation), workforce management (First WF Suite), etc. As for the company’s quarterly trends on a consolidated basis, net sales for Q4FY20 increased by 10.69 per cent to Rs 1,067.26 crore from Rs 964.22 crore reported for Q4FY19. The PBDT expanded by 15.56 per cent to Rs 150.47 crore for Q4FY20 as compared to Rs 130.21 crore for Q4FY19. The company gained net profit of Rs 911.58 crore in Q1FY20, a decline by 6.79 per cent as against net profit of Rs 98.24 crore gained in Q4FY19. Firstsource Solutions is reported to have many deals and also various strategic partnerships in the pipeline. Going forward, it is expected to continue to benefit from strong growth across all its business segments. Hence, our recommendation is to BUY the scrip.

MOTHERSON SUMI SYSTEMS LIMITED 

CMP - Rs 107.45 

BSE CODE : 517334
Volume : 21,11,264
Face Value : Rs 1
Target : Rs 118
Stoploss : Rs 99.50 (CLS)

Motherson Sumi Systems is a system solutions provider to automotive and other industries, offering services from design and prototyping to production and delivery of solutions across a range of products. On a quarterly consolidated front, net sales reported for Q1FY21 amounted to Rs 8,503.89 crore, down from Rs 16,792.53 crore in Q1FY20. The company reported an operating loss of Rs 1,405.96 crore in Q1FY21 as against an operating profit of Rs 538.04 crore in Q1FY20. It reported net loss of Rs 1,191.65 crore in Q1FY21 as against net profit of Rs 360.64 crore in Q1FY20. With production being largely shut down in the months of April-May, the financials for this quarter took a significant hit. Despite this, the company is well-positioned for recovery as it is backed by strong liquidity and a healthy order book. Given its growth opportunities and current valuations of the stock, our recommendation is to BUY this scrip.
(Closing price as of Aug 11, 2020)