A Detailed business analysis of a niche Auto ancillary company having industry high ROCE, ROE with top class renowned management
A special situation play - A Demerger story that is ready to unfold itself
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A special situation play - A Demerger story that is ready to unfold itself
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Before diving deep into this wonderful business let's have a look at India's Growth story as a whole
As per World Bank, Asian Development Bank and the International Monetary Fund projections, India will remain the fastest-growing major economy in the world during 2021-24
As per World Bank, Asian Development Bank and the International Monetary Fund projections, India will remain the fastest-growing major economy in the world during 2021-24
Now this is a trigger by itself to every industry in India and ensures fast growth in most parts of the economy
Now let's have a crisp view about the growth in Auto Industry
The PV volume growth is expected to be between 4-4.5% CAGR in the next few years , a 1.5X gear up
Now let's have a crisp view about the growth in Auto Industry
The PV volume growth is expected to be between 4-4.5% CAGR in the next few years , a 1.5X gear up
Globally, the automotive industry is witnessing several megatrends such as premiumization, electrification, connected/autonomous vehicles etc
Auto sector revival is the talk of the town and what if I tell you that I found a gem in this sector
Auto sector revival is the talk of the town and what if I tell you that I found a gem in this sector
Itβs none other than Motherson sumi wiring limited, a demerged entity from Motherson sumi systems limited
MSUMI is the largest listed wiring harness player in India with a diversified and PAN-India industrial footprint
MSUMI is the largest listed wiring harness player in India with a diversified and PAN-India industrial footprint
Motherson Sumi Wiring India (MSUMI), a JV between Sumitomo Wiring System (SWS) and Motherson Group, is a market leader in the Indian wiring harness industry with a market share of over 40%. This business is unique as it requires high human capital and less automation
MSUMI has the industry leading EBIT/EBIDTA and especially mind-boggling ROCE and ROE with it's closest competitor far behind it
It's due to their proficiency and economies of scale developed through years of expertise in this industry that they are now the Leaders
It's due to their proficiency and economies of scale developed through years of expertise in this industry that they are now the Leaders
What has the demerger helped turn MSUMI into ?
After the demeger, MSUMI has turned into a India focused pure play domestic wiring harness company deriving 95-96% of their revenues from India
This allows them to capture the Indian PV and automotive growth story with focus
After the demeger, MSUMI has turned into a India focused pure play domestic wiring harness company deriving 95-96% of their revenues from India
This allows them to capture the Indian PV and automotive growth story with focus
Wiring harness in simple words is the wiring used inside automotive vehicles, the 2W and 3W content per vehicle is on rise with advancement in smart vehicles and premiumization trends
MSUMI is well poised to take advantage of this macro trend in the industry
How? Read on
MSUMI is well poised to take advantage of this macro trend in the industry
How? Read on
The wiring harness content is likely to gain from: a) increasing electronic content in Indian PV (to rise 2.45x by 2030) and b) electrification of vehicles (content to increase by over 5x in e-2Ws and over 2x in e-PVs).
Source : Motilal Oswal Report
Source : Motilal Oswal Report
The avg. electronic content per vehicle is going to double by FY30
The e-2W has 5X more wiring harness and the Indian e-PV has 2X more wiring harness compared to the ICE counterpart
MSUMI has the highest human capital compared to it's peers - A Big + in this industry
The e-2W has 5X more wiring harness and the Indian e-PV has 2X more wiring harness compared to the ICE counterpart
MSUMI has the highest human capital compared to it's peers - A Big + in this industry
Focus of the company remains firm to increase content and value per car and increasing trust with OEMs to get consistent orders
Management is clear about this view and would love to keep doing their work irrespective of what other's are doing
A great ethical company
Management is clear about this view and would love to keep doing their work irrespective of what other's are doing
A great ethical company
MSUMI 's revenue market share over the years have been consistent and is expected to improve
Let's look at their Numbers now
Roce of 60% and Roe of 50% , arenβt these numbers mind-boggling
Recent quarter sales growth of 50% YOY with 12% OPM
MSUMI has delivered a 14% CAGR growth from FY10-21 while the automotive industry has only delivered a production CAGR of 2%-RS
Roce of 60% and Roe of 50% , arenβt these numbers mind-boggling
Recent quarter sales growth of 50% YOY with 12% OPM
MSUMI has delivered a 14% CAGR growth from FY10-21 while the automotive industry has only delivered a production CAGR of 2%-RS
Look at the last 5 Qtr results, the best times are ahead of us not behind
The PAT is expected to grow at 23-25% CAGR of the next few years and infact even bigger as the management is sure that the growth in EV vehicles is at the cusp of a gigantic growth at this point in India and MSUMi will be a direct beneficiary
The company trades at 60 P/E
The company trades at 60 P/E
After china crossed the USD 2000 per capita income there was a gigantic growth story that was printed by china
15 years later we are at the same point with visionary leaders like Narendra Modi Ji, Nitin Gadkari Ji and Jaishankar
India is set to print growth history
15 years later we are at the same point with visionary leaders like Narendra Modi Ji, Nitin Gadkari Ji and Jaishankar
India is set to print growth history
One of the biggest growth industry during this period was the automotive industry and especially the Auto ancillary in China
Indian Chemical, Specialty chemical will be among the fastest growing sectors in India and Atmanirbhar bharat is going to take India miles ahead
Indian Chemical, Specialty chemical will be among the fastest growing sectors in India and Atmanirbhar bharat is going to take India miles ahead
Technicals:
A young demerged IPO base all set to print new highs in a while
Huge institutional accumulation visible in the volumes
Yesterday there was 30M shares bought in the last 10 minutes , that's definitely big big and massive
A young demerged IPO base all set to print new highs in a while
Huge institutional accumulation visible in the volumes
Yesterday there was 30M shares bought in the last 10 minutes , that's definitely big big and massive
A proxy play to the EV growth in India - MSUMI wiring limited
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Thank You
With Love
VVVStockanalyst
NISM Certified Research Analyst
With Love
VVVStockanalyst
NISM Certified Research Analyst
Disc: I hold MSUMI wiring and hence maybe be biased, I'm not a SEBI registered Inv Advisor and hence contact your Inv advisor before any Buy or sell decision
This is for Educational purpose
This is for Educational purpose
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