MOTHERSON - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.2
| Stock Code | MOTHERSON | Market Cap | 1,43,594 Cr. | Current Price | 136 ₹ | High / Low | 139 ₹ |
| Stock P/E | 79.8 | Book Value | 36.3 ₹ | Dividend Yield | 0.42 % | ROCE | 5.22 % |
| ROE | 4.75 % | Face Value | 1.00 ₹ | DMA 50 | 124 ₹ | DMA 200 | 116 ₹ |
| Chg in FII Hold | 0.70 % | Chg in DII Hold | -0.49 % | PAT Qtr | 483 Cr. | PAT Prev Qtr | 230 Cr. |
| RSI | 63.6 | MACD | 3.37 | Volume | 3,68,81,621 | Avg Vol 1Wk | 4,25,19,560 |
| Low price | 89.7 ₹ | High price | 139 ₹ | PEG Ratio | 2.50 | Debt to equity | 0.22 |
| 52w Index | 94.1 % | Qtr Profit Var | -25.2 % | EPS | 1.70 ₹ | Industry PE | 27.0 |
📊 Financials: MOTHERSON has a market cap of ₹1,43,594 Cr. Quarterly PAT rose to ₹483 Cr. from ₹230 Cr., but profit variation shows -25.2% decline sequentially. ROE at 4.75% and ROCE at 5.22% are weak, reflecting low efficiency. Debt-to-equity ratio of 0.22 indicates manageable leverage. EPS at ₹1.70 is modest relative to scale, limiting earnings visibility.
💹 Valuation: Current P/E of 79.8 is far above the industry average of 27.0, suggesting significant overvaluation. P/B ratio (~3.7) is high compared to book value ₹36.3. PEG ratio at 2.50 indicates expensive growth relative to earnings. Intrinsic value appears lower than CMP ₹136, limiting upside potential.
🏦 Business Model: MOTHERSON operates as a global auto component manufacturer with diversified product lines across wiring harnesses, mirrors, and polymer products. Its competitive advantage lies in global scale, OEM partnerships, and diversified geography. However, profitability is constrained by cyclical auto demand and margin pressures.
📉 Entry Zone: RSI at 63.6 suggests mildly overbought conditions, while MACD at 3.37 indicates bullish momentum. A potential entry zone could be around ₹120–₹125 for accumulation. Long-term investors may hold for global exposure, but valuation risks remain elevated.
Positive
- 📈 Strong global presence with diversified product portfolio.
- 💰 Low debt-to-equity ratio (0.22).
- 📊 PAT growth YoY despite cyclical pressures.
Limitation
- ⚠️ Weak ROE (4.75%) and ROCE (5.22%).
- 📉 High P/E (79.8) vs industry average (27.0).
- 🔄 Profitability sensitive to auto demand cycles.
Company Negative News
- 📉 Decline in DII holding (-0.49%).
- ⚠️ Sequential profit variation (-25.2%).
Company Positive News
- 📊 Quarterly PAT improved YoY from ₹230 Cr. to ₹483 Cr.
- 📈 Increase in FII holding (+0.70%).
Industry
- 💹 Industry PE at 27.0, much lower than MOTHERSON’s 79.8.
- ⚡ Auto component sector expanding with EV adoption.
- 🏦 Global OEM partnerships driving demand but margins remain tight.
Conclusion
⚖️ MOTHERSON is a globally diversified auto component player with strong OEM relationships and low leverage. However, weak returns and stretched valuations limit near-term upside. Entry may be considered around ₹120–₹125 for long-term investors, but caution is advised due to cyclical risks and high valuation multiples.
For a broader perspective, you could explore MOTHERSON peer comparison or a technical chart analysis to complement this fundamental view.