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Systematix Research Report
Motherson Sumi Wiring India Ltd.'s Q1 FY23 operating performance was 5% below our estimate, owing to gross margin contraction. The company delivered a 50%/ 81% YoY revenue/ Ebitda growth, respectively, as production volumes recovered from a low base last year.
Motherson Sumi Wiring has announced-
a new greenfield facility in Chennai, which would also manufacture high-voltage wiring harnesses for electric vehicles (passenger vehicles, buses and two-wheelers),
brownfield expansion in Bengaluru, to supply for new launches (trial run commenced in Q1 FY23).
Over the last 12 years, while the auto industry posted 3%/7% compound annual growth rate in volume/value, Motherson Sumi Wiring registered 14% CAGR in revenue, highlighting marked growth in content per vehicle (driven by increased electronic content).
We see the company as a credible proxy to the domestic passenger vehicle industry's long-term growth prospects, and expect it to trade at a premium to peers, given its ability to sustain return ratios at 50%.
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