MSUMI - Fundamental Analysis: Financial Health & Valuation

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

Fundamental Rating: 3.9

Motherson Sumi Wiring India Ltd (MSUMI) shows strong return metrics and low debt, but its high valuation and declining margins suggest caution. Long-term prospects remain solid due to its OEM relationships and wiring segment leadership.

📊 Financial Overview

• Revenue: ₹9,319 Cr in FY25 — up 13% YoY

  ET Money

  +1

• Profitability: PAT at ₹143 Cr this quarter, down from ₹165 Cr; EPS at ₹0.90

  ET Money

  +1

• Margins: ROCE at 42.5%, ROE at 35.9% — excellent capital efficiency
• Debt Profile: Debt-to-equity ratio of 0.16 — low leverage
• Dividend Yield: 1.19% — modest but consistent payout

📈 Valuation Metrics

• P/E Ratio: 52.2 — significantly above industry average of 32.6

  Stock Analysis

• P/B Ratio: ~18.4 — premium valuation relative to book value ₹2.56
• PEG Ratio: 5.30 — indicates overvaluation relative to growth
• Intrinsic Value: Estimated around ₹42–₹45 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: Leading manufacturer of wiring harnesses for automotive OEMs
• Moat: Long-term contracts with Maruti Suzuki and other OEMs; high entry barriers in wiring systems
• Growth Drivers: EV adoption, export expansion, and premium vehicle wiring demand

📌 Entry Zone Recommendation

• Suggested Entry: ₹42–₹45 — near DMA200 and intrinsic value
• Technical Indicators: RSI at 56.4 (neutral), MACD positive — mild bullish momentum

📈 Long-Term Holding Guidance

• Hold for long-term if accumulated near support; monitor margin trends and OEM order flows
• Valuation needs to cool before aggressive accumulation

✅ Positive

• Strong ROCE and ROE
• Low debt and stable dividend payout
• DII holding increased by 0.35%

⚠️ Limitation

• High P/E and PEG ratios
• QoQ profit decline of 3.88%
• FII holding declined by 0.10%

📰 Company Negative News

• FY25 net income down 5.1% YoY due to higher expenses and margin pressure

  Simply Wall St

🌟 Company Positive News

• Revenue up 13% YoY in FY25; meets analyst expectations

  Simply Wall St

• Strong OEM relationships and export growth support long-term outlook

🏭 Industry

• Auto components industry P/E at 32.6 — MSUMI trades at a premium
• Sector driven by EV adoption, premium vehicle demand, and global supply chain shifts

🧾 Conclusion

• MSUMI is a fundamentally strong auto component player with excellent returns and OEM partnerships
• Accumulate near support zones for long-term growth; monitor margins and valuation

Sources

ET Money

+2