Motherson Sumi Wiring India Ltd. share price target

Motherson Wiring’s (MSUMI’s) 1QFY25 result was below estimate, mainly due to start-up costs of two new plants, resulting in lower-than-estimated EBITDA/PAT of INR2.4b/INR1.5b (est. INR2.7b/INR1.8b).

MSUMI reported another quarter of strong performance, with revenue
/EBITDA/PAT growth of 20%/39%/38% YoY. Continued premiumization trend
(incl. SUV shift) and electrification have been key growth drivers, per
Management.

MSUMI reported another quarter of strong performance, with revenue
/EBITDA/PAT growth of 20%/39%/38% YoY. Continued premiumization trend
(incl. SUV shift) and electrification have been key growth drivers, per
Management.

Motherson Sumi Wiring India (MSWIL)’s Q2FY24 EBITDAM came in at a five-quarter high of 11.8%, and was up ~135bps QoQ, mainly driven by operating leverage with ~13% revenue growth QoQ. With a rich product mix from its key PV clients, MSWIL saw strong value growth set against a single-digit volume growth environment.

Motherson Sumi Wiring India’s (MSWIL) Q1FY24 EBITDAM at 10.4% was down ~80bps QoQ, largely due to annual wage inflation. Gross margin improved 120bps QoQ though it was in line with past 4-quarter mean levels, and had no benefit of any reduction in input commodity costs.

Motherson Sumi Wiring India’s (MSWIL) Q4FY23 EBITDAM at 11.2% was up 62bps QoQ, driven by operating leverage with revenues rising 11% QoQ. Gross margin surprised negatively with ~260bps QoQ decline (lowest since MSWIL got demerged) due to a combination of change in mix, copper price fluctuations, adverse currency hedges, etc.

Motherson Sumi Wiring India’s (MSWIL) Q3FY23 EBITDAM at 10.6% was 100bps lower than expected and 70bps higher QoQ as, despite ~200bps QoQ gain in GM, 8% QoQ lower revenues exerted a negative impact. In the reported numbers, ~60bps impact on EBITDAM was due to one-offs in the form of forex loss and cost of software upgrades.

Motherson Sumi Wiring India Limited (MSWIL) is a beneficiary of Indian automotive
premiumisation and electrification other than its volume growth being correlated to long-term OEM volume CAGR of ~6-7%.