Despite the lackluster session, Motherson Sumi Wiring’s market cap managed to clock in at Rs 190,897 million. The company’s market capitalisation has seen a steady increase since its listing on the National Stock Exchange last November. Motherson Sumi’s share price is up over 31.5% in the last three months. It has a hefty 45 to 50 per cent share in the domestic wiring harness market. In fact, Motherson Sumi has a lot to be proud of. As of March 31, it had retained earnings of Rs 404.5 crore.
A study conducted by ICICI Securities suggests that Motherson Sumi’s share price is up for the taking. The company’s share price has actually outperformed the Nifty Auto index. The company has a healthy asset turnover and margins, and has the financials to match. The company is also one of the largest auto component makers in the world. Despite the company’s relative newness, it is also one of the most competitive in the business.
Motherson Sumi’s share price has managed to outperform its peers in the auto sector, especially in the domestic segment. The company has been able to wring out a healthy margin from its operations, and has been able to outshine its peers in the small and large motor segment. The company has also gotten a big boost from the government, especially in the form of the Jawaharlal Nehru National Solar Mission. Moreover, a joint venture with Sumitomo Wiring Systems, Ltd., a Japan-based company, has made Motherson Sumi a player in the global wire and harness business. The company’s products are sold in the United States and Europe. It is also a partner with Tesla in the production of components for its vehicles.
The company’s best performing product segment is wiring harnesses, and it is also one of the leading manufacturers of other electric wires and harness components. It is also the first company to receive the ISO 9000 certification in India, and is well positioned to benefit from the emerging trend of electric vehicles in India. In fact, the company’s market cap has actually managed to outperform its peers in the last three months. In fact, Motherson Sumi’s share price is currently up over 47% in the last three months, and the company is expected to grow further in the coming months. The company also has a strong balance sheet, and is one of the best performers in the industry.
The company has also made its presence felt in the stock market with the announcement of its maiden bonus issue. The company will issue two bonus shares for every five shares held. The company has also announced its sexiest awards for its employees, and is currently on a mission to improve its processes. The company’s new bonus issue will be credited to the company’s accounts two days after its issue date. The company’s board of directors also met today, and recommended the issue of bonus shares. Moreover, the company has also made a slew of other announcements, and the company’s products will be showcased at a tradeshow in Mumbai in May.
ICICI Securities assigned a Buy rating to Motherson Sumi’s shares and assigned structural levers to support long-term secular growth. Motherson Sumi Systems is one of the largest auto component manufacturers in the world and sells some components to Tesla. Motherson Sumi Wiring was formed when the domestic wiring harness business was spun off from Motherson Sumi Systems Ltd. Motherson Sumi Wiring is now a publicly traded company on the National Stock Exchange of India.
Motherson Sumi has a market capitalisation of about 190,897 million rupees. As of March 31, the company had a retained earnings of 404.5 crores. The company has a healthy balance sheet with a hefty cash position and healthy asset turnover. The company’s marquee product is its wiring harnesses which is a large part of its revenue. Motherson Sumi Wiring has a 45-50 percent share in the domestic market. The company has a few other products in its portfolio including electric wires, harnesses, and wire harnesses for heavy vehicles. The company’s stock is up 29% since its listing. Motherson Sumi’s share price has outperformed the Nifty Auto index by a hefty margin.
Motherson Sumi is just the tip of a very large iceberg, containing a handful of publicly traded companies. The largest ancillary is Motherson Sumi Systems Ltd. The aforementioned company has a slew of products including wire harnesses for heavy vehicles, electric wires and harnesses for heavy vehicles, and electric wires for light vehicles. Motherson Sumi’s market capitalisation is only a fraction of a percentage point of its parent company’s. Motherson Sumi’s aforementioned product is not as large as its parent company, which makes it an attractive acquisition target. Motherson Sumi’s share price may have gotten a bit overextended during the recent market gyrations, but the company’s underlying financials are in good shape. The company’s products are a good match for the booming electric vehicle market in India.
Motherson Sumi’s Q2FY23 results were announced on Friday. The company has seen a modest revival since its IPO in March 2009. A few IPOs have come and gone over the years, but Motherson Sumi has been able to retain its top spot in the auto ancillary sector. The company has a robust balance sheet with healthy margins and a decent asset turnover.