- Revenue surged 25.5% YoY, fueled by new greenfield plants.
- PAT fell short at INR 1.5 bn, primarily due to copper price spikes.
- Capital efficiency remains top‑decile, giving the stock a valuation edge.
- EV adoption and auto‑mega‑trends create a multi‑year growth runway.
- Motilal Oswal reiterates BUY with a 36× Dec‑27E EPS target of INR 52.
Most investors skimmed the headline‑level profit miss. That could be the biggest mistake of the year.
Why Motherson Wiring’s Profit Gap Aligns With Industry Inflation Pressures
Motherson Wiring (ticker: MSUMI) posted a profit after tax (PAT) of INR 1.5 billion, a 6.8% year‑over‑year rise but still below the consensus estimate. The shortfall isn’t a red flag; it mirrors a sector‑wide surge in copper prices—a raw material that accounts for roughly 30% of wiring costs. When copper spiked 20% YoY, manufacturers across the auto supply chain felt the pinch, compressing margins despite solid top‑line growth.
Revenue Rocket: Greenfield Expansion Adds INR 2.5 bn to the Top Line
Revenue climbed 25.5% to INR 28.9 bn, largely thanks to the commissioning of three greenfield facilities that contributed INR 2.5 bn in the quarter. These plants are strategically located near key automotive hubs, reducing logistics costs and positioning Motherson to capture a larger share of the electrified‑vehicle (EV) wiring market.
Sector Trends: EVs, Autonomous Driving, and the Wiring Boom
The auto industry is in the middle of a paradigm shift. EV adoption in India is projected to hit 30% of new vehicle sales by 2028, while autonomous driving modules demand higher‑density wiring harnesses. This creates a “mega‑trend” tailwind for wiring specialists. Companies that can scale quickly, maintain capital efficiency, and lock in long‑term OEM contracts stand to reap outsized returns.
Competitor Landscape: How Tata Auto‑Components and Adani’s New Ventures Stack Up
Tata Auto‑Components (TATACOMP) recently announced a 15% capacity increase in its wiring division, but its capital efficiency lags behind Motherson’s top‑decile benchmark. Meanwhile, Adani’s foray into automotive components focuses on battery packs rather than wiring, leaving Motherson as the clear leader in the high‑growth niche of EV harnesses. This competitive moat underpins the bullish valuation outlook.
Historical Parallel: The 2018 Copper Shock and What It Taught the Market
In 2018, copper prices surged 18% due to supply constraints in Chile. Wiring manufacturers saw margin compression, yet those with diversified product lines and efficient plants not only survived but emerged with higher market shares. Motherson’s current situation mirrors that episode, but with the added catalyst of EV demand, making the upside potential even more compelling.
Technical Definition: Decoding “36× Dec‑27E EPS”
The target price of INR 52 is derived using a forward price‑to‑earnings (P/E) multiple of 36× projected earnings per share for fiscal year ending December 2027. A 36× multiple is considered premium for the auto components sector, reflecting expectations of strong growth and superior return on capital.
Investor Playbook: Bull vs. Bear Cases
Bull Case: Continued EV rollout accelerates wiring demand; greenfield plants reach full capacity by FY2025, lifting margins. Copper prices stabilize, and Motherson’s capital efficiency translates into higher earnings yield, justifying the 36× forward P/E and INR 52 target.
Bear Case: Copper prices remain elevated longer than anticipated, eroding profitability. Delays in plant ramp‑up or slower OEM adoption of EVs could compress revenue growth, forcing a re‑rating to “Hold” and a target price nearer INR 40.
Given the current fundamentals and the macro tailwinds, the balance tilts toward the bull scenario. Investors seeking exposure to the EV supply chain should consider adding Motherson Wiring to a diversified auto‑components basket.