Motherson Sumi Wiring India, a midcap auto stock, is recommended to be added to the portfolio by experts. This stock corrected sharply after it reported Q1 result for FY26, under which revenue growth was strong but EBITDA margins were down. Motherson Sumi has recently allotted bonus shares to its eligible investors in the ratio of 1:2.
Motherson Sumi Wiring India Share Price:
After market hours of July 30, Motherson Sumi shares closed at Rs 37.77 apiece, down by 2.95% on BSE, with a market cap of Rs 25,047.79 crore. The stock is a midcap under Rs 50.
YTD, the stock is down by nearly 4%.
Motherson Sumi Wiring India Shares Recommendation:
According to Emkay Global, MSUMI reported another quarter of strong double-digit revenue growth (up 14% YoY; ahead of consensus estimates), outpacing the 3% PV industry production growth on strong content rise and market share gains, driven by its presence in the majority of the new model launches. A sharp 260bps QoQ rise in staff costs (on hiring at new greenfields ahead of the SOPs) hit profitability as EBITDAM fell by 100bps QoQ to 9.8% (ex-greenfields EBITDAM: 11.8%).
However, the analysts at Emkay added, "Per the management, margins are expected to improve as utilisation levels enhance at the 3 new greenfields; these combined are expected to contribute another Rs21bnpa on full ramp-up. The Pune and Gujarat plant (one phase) are set to ramp up from Q2, with the Kharkhauda plant on track to commercialize from Q2. Certain SOPs pertaining to the Gujarat plant have been deferred to Q4FY26 (vs earlier guidance of Q2FY26) due to a delay in the OEM model launch."
Analysts further said, "We cut FY26E/27E EPS by 11%/6% to factor in the delayed ramp-up and front-loading impact (higher employee cost) from greenfields; margin expansion remains contingent on improved utilisation (of these plants), which in turn is dependent on the success of key customer OEM EV models. We retain ADD with unchanged TP of Rs40 (Rs60 earlier; adjusted for the bonus issue) at 28x Jun-27E PER."
Also, analysts at Choice Institutional Equities said, "MSUMI reported a strong revenue growth of 14.2% YoY, but EBITDA margin was down 114 bps YoY due to a sharp jump in employee costs this quarter. This was primarily due to the new greenfield projects that involved significant manpower hired for training and upskilling before production lines are fully commissioned. We believe the EBITDA margin will remain negatively impacted in the next few quarters and start-up-related costs will also remain high in H1FY26. It is expected to moderate thereafter in H2FY26 and further improve in FY27 as new plants ramp up production and volumes come in."
On the valuation, Choice's analysts said, "We revise our FY26 and FY27 EPS estimate upwards by 1.9% and 1.5%, respectively, arriving at a target price of INR 42, valuing the company at 30x (maintained) of the average FY27/28E EPS while introducing FY28E estimates. We assign an 'ADD' rating to the company, which was previously 'REDUCE'."
During Q1FY26, Motherson Sumi reported net profit excluding Greenfields at Rs 169 crore, registering a growth of 4.3% YoY. While revenue stood at Rs 2,338 crore, posting growth of 7.2% YoY. EBITDA surged by 7.4% YoY to Rs 275 crore.
On July 28, Vivek Chaand Sehgal, Chairman, Motherson Sumi Wiring India said, "While the ramp-up at a specific Greenfield project is growing at a slower-than-expected rate due to market dynamics, we remain on track with our strategic expansion plans to support future requirements of OEMs. Our commitment to operational excellence and customer partnership positions us well for sustained growth and value creation in the coming quarters."
Motherson Sumi Wiring India Bonus Issue:
Recently, the company approved and allotted 221,05,53,966 equity shares aggregating to Rs 221.05 crore as fully paid-up bonus shares. For this, Motherson Sumi turned ex-bonus on July 28, for bonus issue ratio of 1:2. This means that Motherson Sumi has allotted 1 free share on existing 2 equity shares to eligible shareholders.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.
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