MOTHERSON - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.5

📊 Motherson exhibits strong global presence and low debt, but high valuation and weak return metrics limit its fundamental appeal.

📈 Positive

• Low Leverage: Debt-to-equity ratio of 0.13 reflects prudent financial management.
• Global Footprint: Operates across automotive, aerospace, and logistics sectors with diversified revenue streams.
• Quarterly Profit Surge: Qtr Profit Var of 112% indicates strong operational recovery.
• Technical Support: Trading near DMA 50 and 200 suggests stability.
• Dividend Yield: 0.54% offers modest income for long-term holders.

⚠️ Limitation

• High Valuation: P/E of 63.0 is nearly double the industry average of 32.6.
• Weak Return Metrics: ROCE at 5.16% and ROE at 4.33% indicate suboptimal capital efficiency.
• Declining PAT: ₹355 Cr. vs ₹645 Cr. in previous quarter shows volatility.
• Low EPS: ₹1.67 may not justify current valuation.

📉 Company Negative News

• FII holdings declined by 0.64%, indicating reduced foreign investor confidence.
• Concerns over high PEG ratio (8.23) suggest growth may not justify premium pricing.

📈 Company Positive News

• Strong YoY growth in consolidated net profit and revenue.
• Expansion into EV components and smart mobility solutions enhances future readiness.
• Positive DII sentiment with a 0.29% increase in holdings.

🏭 Industry

• Automotive components sector is rebounding with demand from EV and premium vehicle segments.
• Industry P/E of 32.6 reflects moderate valuation norms.
• Motherson’s scale and OEM relationships offer competitive advantage.

🧾 Conclusion

• Entry Zone: ₹90–₹98 could be a better accumulation range based on RSI and valuation.
• Long-Term View: Hold with caution; monitor margin expansion and ROE improvement.
• Valuation Watch: Wait for earnings catch-up or price correction before aggressive accumulation.

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