Thread by @LnprCapital

MOTHERSON Analysis !!
#Motherson

A detailed #Thread below 🪡🧵
#StockMarket #Investing

About -

Motherson is one of the world’s largest manufacturers of components for the automotive and transport industries. With a diverse global customer base of nearly all leading automobile manufacturers
globally, the co has a presence in 36 countries across six continents.

Financial Summary -
Q3 FY22 (YoY)

Revenue were at ₹ 16240 Cr.⬇️5%
PAT at ₹ 245 Cr.⬇️69%
EPS at ₹ 0.8 ⬇️69%

Creating Two High Growth Companies -

Both companies are well capitalised to pursue their growth opportunities.

▪️ Samvardhana Motherson International Ltd. (SAMIL):

• Well diversified company across products, customers & countries.

• Product portfolio favorably aligned to future industry
changes.

• Shareholders to gain from full synergies from group.

• Unified structure provides platform for future growth.

De-merger of the domestic wiring harness business into a separate listed entity (Motherson Sumi Wiring India Ltd, MSWIL) will allow Sumitomo Wiring Systems to focus on its core wiring harness business. Merger of Samvardhana Motherson International Limited (SAMIL, promoter entity)

into Motherson Sumi systems (MSSL) will bring all auto component and allied businesses under one roof to drive the next leg of growth.

MSSL’s reorganisation simplifies the current group structure and aligns the interests of promoters and shareholders.

▪️ Sumi Wiring India Ltd.(MSWIL):

• Focus on India wiring harnesses.

• Access to technology solutions with strong parentage.

• Benefits of backward integration remain intact.

• Leveraged to India growth story with rising content
per car.

MSWIL is the market leader in the domestic wiring harness segment with 65% market share in PV and 33% in the 2W and CV space. Backed by technical collaboration with Sumitomo (global market leader in PV wiring harness) and a sharp increase in content per vehicle.

On right side of global automotive megatrend -

The global automotive industry is at the cusp of disruption, led by megatrends in the form of (1)EVs, (2) connect cars, (3) autonomous cars, (4) shared mobility, (5) stricteremission norms, & (6) platform & vendor consolidation

These trendshave the potential to disrupt the automotive supply chain and challengeincumbents. We believe, with its diverse product base and market presence,MSS is set to leverage on these trends to drive its next wave of growth.

Global Presence -

A multinational with a global network of manufacturing facilities, engineering & design centres, marketing offices, logistic centres & sourcing hubs
across the world to serve customers globally. Co located in 270 facilities across 41 countries.

Co entered Aerospace industry via 55% stake acquisition in Bengaluru based CIM Tools, engaged in machining, treatment, sub-assembly, testing of
detailed aircraft parts. The transaction values CIM group at ~7.5-8x FY20 EV/EBITDA.

Motherson Sumi Systems Limited (MSSL), via its Mexican subsidiary, Motherson Rolling Stocks S. de R.L. de C.V. (MRS), has successfully completed the acquisition of assets and activities of Electrical Wiring Interconnection Systems (EWIS) performed at Bombardier Transportation’s

manufacturing site in Huehuetoca, Mexico. MRS is part of the Motherson Rolling Stock Division which designs and manufactures electrical cabinets, power packs and electrical distribution systems for leading rolling stock manufacturers. In the past the company had also acquired

Bombardier’s UK rolling stock electrical component and systems business in Derby.

Key Risk:

▪️ Near term volume challenge at key OEM customers
amid global chip shortage.

▪️ Rise in key commodity prices & consequent impact on margins.

Conclusion -

The continuance in RM cost inflation & other supply chain disruptions are likely to dampen Co’s revenue and profitability in near-term. But co has insulted itself via passthrough of cost & diversification strategy. The robust order book, strong global PV demand &

marginally improved situation at semi-conductor issue will aid the performance.

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@caniravkaria @shubhfin @WealthEnrich