Motherson Sumi Wiring India Limited (MSWIL) is a market leader in the Indian wiring harness industry with a market share of over 40%. The company is a joint venture between Samvardhana Motherson International Limited (SAMIL) and Sumitomo Wiring Systems, Ltd. (SWS). It supplies to 2 out of top 3 Electric Vehicle Passenger Vehicle (PV) OEMs and 2 out of top 5 Electric Vehicle 2W OEMs in India.
| Recommendation | PRICE RANGE | Target Price | Time Horizon |
| Buy | ₹ – 63.00 | Rs. – 80.00 | 12 Months |
Stock Details |
|
| Market Cap. (Cr.) | 27154.44 |
| Equity (Cr.) | 442.11 |
| Face Value | 1.00 |
| 52 Wk. high/low | 71.15 / 45.24 |
| BSE Code | 543498 |
| NSE Code | MSUMI |
| Book Value (Rs.) | 3.01 |
| Industry | Auto Ancillaries |
| P/E | 55.84 |
Share Holding Pattern % |
|
Promoter |
61.73 |
| FIIs | 11.26 |
| Institutions | 18.01 |
| Non Promoter Corp. | 0.68 |
| Public & Others | 8.32 |
| Government | 0.00 |
| Total | 100.00 |
Key Investment Rationale:
- After the restructuring of Motherson Sumi Systems Limited, MSWIL evolved into a specialized Indian wire harness business primarily focused on the domestic market. It derives 95% of its revenue from the Indian market with minimal reliance on the exports. Because of this, MSWIL is in a position to directly benefit from the revival of the Indian automotive industry, especially in the domestic passenger vehicle (PV) segment where it is a significant player.
- MSWIL holds over 50% of the market share in the Indian PV segment, despite not providing parts to Hyundai and Kia (because the Kyungshin, JV of Samvardhana International Limited, is primary supplier of those brands). The company is catering to all major OEMs like Maruti Suzuki, Tata Motors, Ashok Leyland, Toyota Motors etc.
- MSWIL is going to benefit with significant electrification trend in the industry. It is expected that the amount of wiring harnesses per vehicle will increase by about 1.5-2x in PVs due to the growing popularity of utility vehicles (UVs) & increased use of electronics and technologies like Advanced Driver Assistance Systems (ADAS). Additionally, in the electric two-wheeler (E-2-W) sector, wiring harness content is likely to surge by around 8x compared to traditional internal combustion engine (ICE) two-wheelers, and in electric passenger vehicles (E-PVs), it’s expected to increase by about 2.4x compared to ICE variants.
- The company now has a total of 26 sites strategically positioned throughout India after the addition of three more facilities. The utilization of one of the plants has currently surpassed 55% and is anticipated to increase by another 10% to 15% in Q2. The other facility has already attained about 80% of its capacity. Only one plant, which is at 50% to 55% current capacity will grow in the coming quarters.
Outlook
MSWIL, the demerged entity of Motherson International Limited, is the leader in the Indian wiring harness market. Company is focused on leveraging the current electrification and indigenization trend in the Indian automotive industry. It is continuously taking proactive approach of capacity expansion and R&D initiatives to meet growing customers’ demand. The installation of a specialized production line for high-voltage wire harnesses and electric vehicle (EV) in Chennai demonstrates a clear commitment to electrification. A steady improvement in the operating performance is expected from 2HFY24, primarily driven by the increased production and utilization of the new plant. Given its strong competitive position, excellent capital efficiency, and alignment with emerging automotive mega-trends like EVs, we recommend investors to buy MSWIL at CMP with the target price of Rs.80 for the time period of 12 months.
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