The recent volatility in several metal prices has put the focus on key stocks that are dependent on industrial metals. Motherson Sumi Wiring India is one such stock. Nuvama Institutional Equities slashed the target price to Rs 60 from Rs 62 due to a rise in the cost of raw material, but is predicting scope for 58% upside from the current market price. The brokerage reiterated its ‘Buy’ rating on the stock.
Rise in raw material prices
The higher copper prices will be the reason for near-term cost pressures, owing to a timing gap in customer settlements, said the company’s management to Nuvama’s analysts. The cost of base metal has been 10% of revenue. The company has planned to pass on 60–70% of the cost increase with a lag of three months, and the rest should be passed on with a lag of six months. The company currently imports 27–28% of its raw materials.
Support from Samvardhana Motherson
However, the company enjoys strong parental support. Samvardhana Motherson International and Motherson Sumi together have an estimated over 55% share in PV wiring harnesses and 25%-plus in the two-wheeler segment.
The company would benefit from Sumitomo’s support via component supplies, technical assistance and new technology products, including gateways, body ECUs, and junction boxes, along with solutions for hybrids and EVs.
The firm is focusing on strengthening its presence with 30 facilities to support demand from customers for ICE, hybrid, and EV wiring harnesses.
Improvement likely in greenfield utilisation
The company’s management said that a marked improvement is expected in greenfield utilisation levels from 45% in Q3FY26 to 65–70% in FY27, due to higher production at Navagam (Gujarat) and Pune (Maharashtra) plants. Also, the company is working with key OEMs and expects to bag multiple orders for upcoming launches.
Yet, the brokerage slashed FY27–FY28 EBITDA by 2–7% due to a lower margin assumption. “Following this revision, we reckon revenue and EBITDA CAGR at 13% and 23% over FY26–FY28,” said Nuvama.
Motherson Sumi Wiring India share price performance
The share price of Motherson Sumi Wiring has changed little in the last five trading sessions. The stock has declined 13% in the past one month and 20% in the last six months. However, Motherson Sumi Wiring India’s share has delivered over 8% return in the last one year.