MOTHERSON - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 2.8

📊 Financials: Motherson has a market cap of ₹1,27,709 Cr. Current price is ₹121 with a 52-week high/low of ₹121/₹71.5. PAT this quarter is ₹732 Cr vs ₹355 Cr in the previous quarter, showing strong growth. ROCE at 5.16% and ROE at 4.33% reflect weak efficiency. Debt-to-equity ratio of 0.18 indicates low leverage.

💹 Valuation: Stock P/E is 68.8, more than double the industry PE of 30.0, suggesting overvaluation. Book value is ₹36.2, giving a P/B ratio of ~3.34. PEG ratio at 8.99 indicates poor earnings growth relative to valuation. EPS is ₹1.76, highlighting limited profitability compared to price.

🏭 Business Model: Motherson operates in auto components and manufacturing, serving global OEMs. Competitive advantage lies in scale, diversified product portfolio, and global presence. However, margins remain thin and profitability is under pressure due to cyclical auto demand.

📈 Entry Zone: Technically, DMA 50 (₹112) and DMA 200 (₹104) suggest support zones. Entry is favorable near ₹104–₹112 if price corrects. Current RSI at 55.9 indicates neutral momentum.

🕰️ Long-Term Holding: Despite strong revenue growth and global presence, weak return ratios and stretched valuations limit compounding potential. Investors should accumulate cautiously on dips closer to intrinsic value zones.

Positive

• ✅ Strong quarterly PAT growth (355 Cr → 732 Cr)
• ✅ Low debt-to-equity ratio (0.18)
• ✅ Global diversified auto component business

Limitation

• ⚠️ High P/E (68.8) vs industry PE (30.0)
• ⚠️ Weak ROCE (5.16%) and ROE (4.33%)
• ⚠️ PEG ratio very high (8.99)
• ⚠️ EPS only ₹1.76

Company Negative News

• 📉 FII holding reduced (-0.64%)
• 📉 Thin profitability despite revenue growth

Company Positive News

• 📈 DII holding increased (+0.29%)
• 📈 Quarterly profit variation (+14%)

Industry

• 🏭 Auto component industry cyclical, tied to global OEM demand
• 🏭 Industry PE at 30.0 highlights Motherson’s premium valuation

Conclusion

🔎 Motherson is a global auto component leader with strong revenue growth and low debt, but weak return ratios and stretched valuations limit attractiveness. Entry zone lies near ₹104–₹112. Long-term investors should accumulate cautiously on dips, while monitoring profitability trends.

Would you like me to extend this with a peer benchmarking overlay comparing Motherson against other auto component manufacturers, or a sector scan to highlight undervalued players in the automotive supply chain?