Buy Motherson Wiring ; target of Rs 70: Motilal Oswal

Motilal Oswal's research report on Motherson Wiring

2QFY24 results miss estimate as EBITDA margin came in at 11.8% (vs. est 12.7%). This shortfall was due to lower gross margins and the gradual rampup of new orders, where operational efficiencies are still being established. However, we expect EBITDA margin to improve by 100bp over the next two quarters and reach close to FY22 levels, led by cost pass-through and ramp up in new facilities.

Outlook

We cut FY24E/25E EPS by 6%/3% to account for the adverse impact of increase in RM cost and lower efficiencies. We reiterate our BUY rating on the stock with a TP of INR70 (35x Dec’25E EPS).