⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
MOTHERSON - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.1
| Stock Code | MOTHERSON | Market Cap | 1,18,188 Cr. | Current Price | 112 ₹ | High / Low | 125 ₹ |
| Stock P/E | 63.8 | Book Value | 36.2 ₹ | Dividend Yield | 0.51 % | ROCE | 5.16 % |
| ROE | 4.33 % | Face Value | 1.00 ₹ | DMA 50 | 114 ₹ | DMA 200 | 107 ₹ |
| Chg in FII Hold | -0.24 % | Chg in DII Hold | 0.59 % | PAT Qtr | 732 Cr. | PAT Prev Qtr | 355 Cr. |
| RSI | 44.6 | MACD | -1.56 | Volume | 73,88,814 | Avg Vol 1Wk | 1,24,07,013 |
| Low price | 71.5 ₹ | High price | 125 ₹ | PEG Ratio | 8.32 | Debt to equity | 0.18 |
| 52w Index | 75.8 % | Qtr Profit Var | 14.0 % | EPS | 1.76 ₹ | Industry PE | 28.0 |
📊 Core Financials
- Quarterly PAT rose to 732 Cr from 355 Cr, showing strong sequential growth but modest YoY variation (+14%).
- ROE at 4.33% and ROCE at 5.16% are weak, reflecting poor capital efficiency.
- Debt-to-equity ratio at 0.18 indicates low leverage and manageable debt levels.
- Cash flows supported by global automotive operations, but margins remain thin.
💹 Valuation Indicators
- P/E ratio: 63.8, significantly higher than industry average of 28.0, suggesting overvaluation.
- P/B ratio: ~3.1 (112 ₹ / 36.2 ₹ book value), showing premium pricing.
- PEG ratio: 8.32, very high, indicating poor growth-adjusted valuation.
- Intrinsic value appears lower than current price, limited margin of safety.
🏢 Business Model & Competitive Advantage
- Motherson operates as a global auto component manufacturer with diversified product lines.
- Competitive advantage lies in strong OEM relationships and global footprint.
- Exposure to cyclical automotive demand limits stability, but scale provides resilience.
📈 Entry Zone & Long-Term Guidance
- Entry zone: 105–110 ₹ range (near 200 DMA support at 107 ₹).
- Long-term holding viable for investors seeking exposure to global auto components.
- Accumulation should be cautious due to stretched valuations and weak return metrics.
Positive
- Quarterly PAT doubled sequentially, showing operational improvement.
- Low debt-to-equity ratio (0.18), ensuring financial stability.
- DII holdings increased (+0.59%), reflecting domestic institutional support.
Limitation
- High P/E (63.8) compared to industry average (28.0).
- Weak ROE (4.33%) and ROCE (5.16%).
- PEG ratio at 8.32 highlights poor growth-adjusted valuation.
Company Negative News
- FII holdings decreased (-0.24%), showing reduced foreign investor confidence.
- Stock trading below 50 DMA (114 ₹), reflecting short-term weakness.
Company Positive News
- Quarterly PAT growth demonstrates strong operational recovery.
- DII holdings increased, showing domestic support.
Industry
- Industry PE at 28.0, much lower than Motherson’s 63.8, highlighting sector undervaluation relative to Motherson.
- Automotive component industry expected to grow steadily with EV adoption and global recovery.
Conclusion
- Motherson is fundamentally stable with global scale but weak profitability metrics.
- Valuations remain stretched, making accumulation near 105–110 ₹ more attractive.
- Best suited for long-term investors seeking auto component exposure, but caution advised due to high valuation multiples and low returns.
I can also prepare a peer comparison with Bharat Forge and Bosch to highlight how Motherson stacks up in valuation and profitability if you’d like.