ICICI Direct Recommends Buying Motherson Sumi Wiring India, Targets Rs 50

Motherson Sumi Wiring India Exceeds Expectations with 10% Revenue Growth

Motherson Sumi Wiring India (MSUMI) has reported a revenue growth of 10% above the estimate set by ICICI Direct's research team. This exceptional performance can be attributed to the company's ability to outperform its underlying industry, driven by healthy content growth and successful execution of new business initiatives. Despite facing challenges related to higher copper prices and start-up costs for its new plants, MSUMI has demonstrated its resilience and potential for future growth.

The company's reported margins were impacted by a 250bps (basis points) effect of higher copper prices, as well as start-up costs for its new plants. However, MSUMI's focus on features-led premiumisation and a gradual shift towards electric vehicles (EVs) and hybrids is expected to drive higher content per vehicle over the medium-to-long term. The addition of new capacity, aligned with customer order wins, is anticipated to fuel healthy revenue growth.

Key Drivers for Future Growth

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Ramp-up of new plants, pass-through of raw material (RM) costs, and improved efficiency, including localisation, are crucial factors for MSUMI to achieve margin recovery. These developments will play a significant role in the company's ability to sustain its growth momentum.

Recommendation

ICICI Direct maintains a BUY rating for MSUMI with an unchanged target price of INR 50, based on a 35x earnings per share (EPS) estimate for FY27.

Revenue Growth Comparison

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Note: The revenue growth comparison is provided to illustrate MSUMI's exceptional performance in comparison to ICICI Direct's estimates.