MOTHERSON - Samvardh. Mothe.

📊 NSE: MOTHERSON 🏢 Auto Ancillaries 📅 Last Updated: 12/14/2025 12:45

💰 Financial Performance

Revenue Growth by Segment

In Q2 FY26, total revenue reached INR 30,173 Cr, growing 8.5% YoY. Segment performance included: Wiring Harness at INR 8,550 Cr (10.5% EBITDA margin), Modules & Polymer Products at INR 15,374 Cr (7.4% EBITDA margin), and Vision Systems at INR 5,084 Cr (9.2% EBITDA margin). Growth was driven by volume, content increase, and the Atsumitec acquisition.

Geographic Revenue Split

The company follows a 3CX10 strategy to limit geographic risk; currently, no single country contributes more than 21% of overall revenue. This diversification protects the company from regional economic downturns or localized supply chain disruptions in any one market.

Profitability Margins

Operating profitability is expected to remain healthy between 9-10% over the medium term. Normalized PAT for Q2 FY26 was INR 856 Cr, representing a 15% YoY growth. Margins are supported by the ramp-up of new capacities and the successful integration of acquisitions which provide operational synergies.

EBITDA Margin

Normalized EBITDA for Q2 FY26 was INR 2,719 Cr, a 10% increase YoY, with a margin of 9.0%. This reflects a steady improvement from the 9.2% margin in fiscal 2025, driven by better operating leverage and transformative measures in Western and Central Europe.

Capital Expenditure

Total Capex for H1 FY26 was INR 2,653 Cr. In Q2 FY26 alone, Capex was INR 1,445 Cr, representing 53% of EBITDA. This investment is directed toward 10 greenfield projects currently in various stages of completion to support future growth.

Credit Rating & Borrowing

The company maintains a strong credit profile with a Net Debt/EBITDA ratio of 1.1x as of September 2025, which is expected to improve to 0.9x by year-end. Interest coverage ratio was 5.3x in fiscal 2025 and is projected to improve to 6.5-7.0x due to higher cash accruals.

⚙️ Operational Drivers

Raw Materials

Key raw materials include copper (for wiring harnesses), polymers (for modules), and glass/electronic components (for vision systems). While specific percentage breakdowns per material are not disclosed, the company noted an upward trend in commodity prices affecting input costs.

Import Sources

The company utilizes a 'Local for Local' strategy, sourcing raw materials within the same regions where they produce and supply. This minimizes exposure to global logistics volatility and foreign currency translation issues.

Key Suppliers

Not specifically named in the provided documents, but the company manages a global supply chain to support its 400+ facilities.

Capacity Expansion

Motherson is currently executing 10 greenfield projects. Two new greenfields were operationalized in the current period, and the largest consumer electronics facility is expected to come on stream in the latter half of FY27.

Raw Material Costs

Raw material costs are managed through customer pass-through agreements, though these often have a 'lead-lag' effect. The company is actively engaging with customers to offset inflationary pressures and tariff impacts.

Manufacturing Efficiency

Efficiency is being driven by 'transformative measures' in Central and Western Europe. These measures resulted in a double-digit growth in normalized EBITDA despite a dynamic operating environment.

Logistics & Distribution

The company prides itself on low logistics costs by being in the same time zone and language as its customers, which is a key competitive strength in supplying complex automotive parts.

📈 Strategic Growth

Expected Growth Rate

8.50%

Growth Strategy

Growth is driven by a massive USD 87.2 billion booked business pipeline, aggressive M&A (47 acquisitions since 2002), and expansion into non-auto sectors like Aerospace (37% H1 growth) and Consumer Electronics (36% QoQ growth).

Products & Services

Wiring harnesses, vision systems (mirrors/cameras), bumpers, cockpit modules, specialized polymer parts, aerospace components (Tier 1 to Airbus), and consumer electronics.

Brand Portfolio

Motherson, Samvardhana Motherson International Limited (SAMIL), SMR, SMP, PKC, and Atsumitec.

New Products/Services

Expansion into Consumer Electronics is expected to be profit-positive in its first full year of operations, with a major new facility launching in FY27.

Market Expansion

The company is transitioning into a 'design, engineering, manufacturing, and assembly powerhouse,' moving beyond simple component manufacturing to higher-value integrated assemblies.

Market Share & Ranking

The company is a global leader in vision systems and wiring harnesses, recently becoming a Tier 1 supplier to Airbus in the aerospace sector.

Strategic Alliances

The company operates multiple JVs; recent activity includes acquiring a controlling interest in Motherson Auto Solutions Limited.

🌍 External Factors

Industry Trends

The industry is shifting toward higher electronic content and advanced assemblies. Motherson is positioning itself by expanding into aerospace and consumer electronics to diversify away from pure automotive cyclicality.

Competitive Landscape

Competes with global auto-component giants, but differentiates through its aggressive M&A integration capabilities and diversified 3CX10 risk profile.

Competitive Moat

The moat is built on 'Global Trust' from top-tier OEMs, a massive scale that allows for cost leadership, and a unique 'Local for Local' manufacturing footprint that competitors find difficult to replicate globally.

Macro Economic Sensitivity

Sensitive to global trade dynamics and commodity price trends. Stability in European production volumes is critical for the Modules and Polymer segment.

Consumer Behavior

Shift toward premium vehicles and increased electronic features in cars increases the 'content per vehicle' for Motherson's wiring and polymer divisions.

Geopolitical Risks

Trade barriers and evolving powertrain mixes (EV transition) in Europe present structural challenges, though the company reports stability in production volumes currently.

⚖️ Regulatory & Governance

Industry Regulations

Subject to global automotive safety and manufacturing standards. The company is currently managing the impact of evolving trade tariffs through customer negotiations.

Environmental Compliance

The auto component sector has a moderate environmental impact. Motherson focuses on mitigating emissions, water consumption, and waste generation to support its strong credit risk profile.

Taxation Policy Impact

Not specifically detailed, but the company noted a normalization adjustment for exceptional expenses in Europe of INR 36 Cr pretax (INR 29 Cr post-tax).

Legal Contingencies

The documents mention provisions for 'business transformative measures' in Central & Western Europe amounting to INR 36 Cr, but no major pending litigation values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

Uncertainties in global trade dynamics and the pace of the 'ramp-up' of new greenfield facilities could impact short-term profitability by 1-2%.

Geographic Concentration Risk

Europe remains a significant region, though no single country exceeds 21% of revenue.

Third Party Dependencies

Low dependency on single suppliers due to the 'Local for Local' sourcing model which diversifies the vendor base across multiple continents.

Technology Obsolescence Risk

The shift to new powertrains (EVs) is a risk, but the company’s focus on 'content growth' in wiring and vision systems (which are powertrain-agnostic) mitigates this.