CRISIL Ratings stated that the ratings continue to reflect established market position of MSWIL in the wiring harness segment of domestic automotive components industry, long term relationships with most major auto original equipment manufacturers (OEMs), robust financial risk profile and strong parentage of Samvardhana Motherson International Limited and Sumitomo Wiring Systems.
These strengths are partially offset by single product portfolio of MSWIL in automotive component industry, geographical concentration in the domestic market and exposure to cyclicality in auto sector.
MSWIL revenue has continued to grow in FY24, registering a growth of 18% to Rs 8,300 crore, compared to Rs 7,000 crore in FY23. The growth was backed by healthy demand in the Indian automotive industry. The revenue is expected to increase by 8-10% in the medium term.
Operating profitability is expected to sustain at around 12-13% in the medium term, and around 12.2% in fiscal 2024 due to an increase in revenues and better absorption of fixed costs. The localization of component manufacturing also contributes to the margin improvement.
The company has planned a capex of Rs. 200 crores in FY25, funded entirely by internal accruals. Around 70% of this would be utilized for growth and expansion, the remaining 30% being utilized for productivity, quality improvement, as well as the maintenance of the replacement of the assets which have lived their useful life.
MSWIL is focused on organic growth through increasing content per car. With domestic wiring harness segment of automotive components industry dominated by few players and MSWIL being the market leader, opportunities for inorganic growth through acquisitions are limited. Hence, leverage of MSWIL is expected to remain low.
Motherson Sumi Wiring India (MSWIL) houses the automotive wiring harness business of erstwhile Motherson Sumi Systems. The company is a full system solutions provider for its customers and is equipped to cater to their requirements in every step of the supply chain from the initial product design and validation, through tool design and manufacturing, finishing, and processing, assembly, production of integrated electrical & electronic distribution systems for the power supply or data transfer across vehicles to sequencing in-line supplies.
MSWIL had achieved revenues and PAT of Rs 8,300 crore and Rs 638 crore in FY24 as compared to revenues and PAT of Rs 7,000 crore and Rs 480 crore in FY23.
The scrip had shed 0.12% to end at Rs 75.66 on the BSE yesterday.
Domestic equity markets are shut today on account of Muharram.