MOTHERSON - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 2.7

📊 Core Financials Breakdown

Profitability

ROE at 4.33% and ROCE at 5.16% are weak, indicating poor capital efficiency.

EPS of ₹1.67 is low relative to the stock price, suggesting stretched valuation.

PAT dropped significantly from ₹645 Cr to ₹355 Cr QoQ, showing earnings volatility.

Debt & Liquidity

Debt-to-equity ratio of 0.13 is excellent, reflecting strong financial discipline.

Dividend yield of 0.52% is modest but adds some income appeal.

Cash Flow & Stability

PEG ratio of 8.51 is extremely high, implying overvaluation relative to earnings growth.

Book Value of ₹35.5 vs Current Price ₹109 implies a high P/B ratio (~3.07), suggesting premium pricing.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 65.2 Overvalued vs industry PE of 29.1

P/B Ratio ~3.07 Premium valuation

PEG Ratio 8.51 Indicates overvaluation

Intrinsic Value ~₹85–₹95 Estimated below current price

The stock appears overvalued, especially considering its weak return metrics and volatile earnings.

🏭 Business Model & Competitive Edge

Sector: Samvardhana Motherson International Ltd (SAMIL) is a global auto-ancillary giant, supplying wiring harnesses, polymer modules, vision systems, and more to OEMs worldwide

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Strengths

Global footprint with 82% revenue from overseas markets

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Low debt and diversified product base

Challenges

Weak profitability

High valuation

Declining quarterly profits

The company has scale and reach, but its financial performance doesn’t currently justify its valuation.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹90–₹100

Near 200 DMA (₹98.8) and below current price

RSI at 70.8 suggests overbought conditions

MACD positive, but momentum may be peaking

🧭 Long-Term Holding Guidance

Hold if Already Invested: Only if you believe in long-term global auto recovery and margin expansion.

Avoid Fresh Entry at Current Levels: Wait for valuation to cool or earnings to stabilize.

Watchlist Triggers

ROE/ROCE improvement

EPS growth

Institutional accumulation

Motherson has the pedigree and global presence, but its fundamentals need to catch up with its price. A cautious, value-driven approach is best here.

You can explore deeper insights on TradeBrains or Screener. Let me know if you'd like a peer comparison or technical chart to round this out.

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