Buy Motherson Wiring; target of Rs 80: Motilal Oswal

Motilal Oswal's research report on Motherson Wiring

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). Nonetheless, MSUMI reported a healthy revenue growth of ~17% YoY, notably outperforming the underlying domestic industry volumes led by content increase. To factor in high operating expenses, we cut our FY25E/26E EPS by 6%/5%. Despite this, we remain optimistic about margin expansion in the coming quarters, led by improved product mix, declining copper prices, and increasing localization. Reiterate BUY with a TP of INR80 (based on 36x Jun’26E EPS).

Outlook

We believe MSUMI deserves rich valuations, given its strong competitive positioning, top-decile capital efficiency, and benefits of EVs and other mega- trends in Autos. The stock trades at 42x/33x FY25E/26E EPS. Reiterate our BUY rating with a TP of INR80 (premised on ~36x June-26E EPS).