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Systematix Research Report
Motherson Sumi Wiring India Ltd.'s Q3 FY23 operating performance was below our estimate led by higher manpower costs as the company has expanded its workforce to cater to new program launches.
The company has delivered a 16% YoY growth / 9% QoQ dip in revenue, as original equipment manufacturer production volumes increased YoY but lowered QoQ.
During the year, Motherson Sumi Wiring announced a new greenfield facility in Chennai, which would also manufacture high-voltage wiring harnesses for electric vehicles (passenger vehicles, buses and two-wheelers), and a brownfield expansion in Bengaluru, to supply for new launches, both of which are expected to reach optimum utilisation by Q1 FY24.
Over the last 12 years, while the auto industry posted a 3%/7% compound annual growth rate in volume/value, Motherson Sumi Wiring registered a 14% CAGR in revenue, highlighting marked growth in content per vehicle (driven by premiumisation).
We see Motherson Sumi Wiring as a credible proxy to the domestic PV industry's long-term growth prospects and expect it to trade at a premium to peers, given its ability to sustain strong free cash flow and return ratios.
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