Motherson Wiring Systems Targeted at Rs 46 by Motilal Oswal

Motherson Wiring's 4Q PAT Falls Short of Estimates Amid Rising Copper Prices

Motherson Wiring, listed as MSUMI, reported a 4th quarter (4Q) profit after tax (PAT) of INR1.7 billion, which marks a 1.4% year-over-year (YoY) increase. However, the figure fell short of the research firm Motilal Oswal's estimates. The primary reason behind this underperformance is the 18% quarter-over-quarter (QoQ) jump in copper prices. Although rising copper prices have a pass-through effect with a quarter-long lag, the sustained increase in copper prices over the last few quarters has been detrimental to the company's margins.

Motilal Oswal's Research Report

Considering the anticipated pickup in auto demand following the Goods and Services Tax (GST) rate cuts and the ramp-up of its new greenfield plants, Motilal Oswal estimates Motherson Wiring to post a compound annual growth rate (CAGR) of 11%/18%/18% in revenue/earnings before interest, taxes, depreciation, and amortization (EBITDA)/PAT over the fiscal years 2026-2028 (FY26-28E). The company's premium valuations, which stand at 36x/30x FY27E/FY28E earnings per share (EPS), are deemed justified by its strong competitive positioning, top-decile capital efficiency, and benefits of electric vehicles (EVs) and other mega-trends in the auto industry.

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Outlook and Recommendation

Motherson Wiring's stock trades at 36x/30x FY27E/FY28E EPS. Given its strong competitive positioning, top-decile capital efficiency, and benefits of EVs and other mega-trends in autos, the research firm believes the company deserves rich valuations. As a result, Motilal Oswal reiterates its BUY rating with a target price of INR46, based on 35x FY28E EPS.