Motherson Sumi Wiring - Beneficiary Of Indian Automotive Premiumisation: ICICI Securities Initiates Coverage

ICICI Securities Report

Motherson Sumi Wiring India Ltd. is a beneficiary of Indian automotive premiumisation and electrification other than its volume growth being correlated to long-term original equipment manufacturer volume compound annual growth rate of ~6-7%.

With average addition of ~2% of the vehicle cost for wiring harness system, rising complexity of cars through premiumisation is the key sustainable driver for growth.

Also, electrification would result in two times addition for wiring harness/vehicle, adding further to growth potential.

Domestic peers of Motherson Wiring like Yazaki, Lear etc. are operating at ~20-25% its scale with ~4-5% mean Ebitda margin and single digit capital efficiency.

This implies the company is maintaining leadership (~45-50% of overall market share) and is not aggressively aiming to gain market share at the cost of margin or return on capital employed.

Fixed asset turn of Motherson Wiring is ~10-11 times and total asset turn is ~4-5 times, much higher than peers, as it shares services from assets owned by the Motherson Group at the cost of ~2% of sales.

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