Prime Stock Recommendation: Average call on this auto ancillary player

1. 

   madhavans

   February 5, 2025 at 7:14 pm

   Seems like the company only focuses on one product. wouldn’t that be a huge risk in the future? And do you think there is Moat for this company ?
   1. 

      Sudharsan S

      February 6, 2025 at 4:32 pm

      Hi sir, Yes this company focuses on one product, and wiring harness is a critical and a complex process so auto makers do not often switch and they stick to one or two reliable companies, MSUMI has Sumitomo Wiring a global auto wire harnessing company as a parent this acts as a strong parent advantage and a possible technology transfer from the parent these two things act as a MOAT for this company.
      Thanks,
      Sudharsan.
2. 

   Seetaramarao Tv

   January 24, 2025 at 9:47 am

   Thanks for the Update. Point well noted.
   1. 

      Sudharsan S

      January 24, 2025 at 10:01 am

      Thank you sir.
3. 

   Seetaramarao Tv

   January 23, 2025 at 7:22 pm

   What are the reasons why the stock got hammered down so badly. Slowdown in the automotive industry?
   Looks like the bearish trend will continue with this stock as there is a breach of support levels
   The risk remains with this kind of stocks who operate with limited products and to a particular segment only.
   But the long term growth opportunity is still intact.
   I have not invested in this stock
   1. 

      Sudharsan S

      January 24, 2025 at 9:42 am

      Hi sir,
      After the covid rally the auto sector is currently going through a cyclical downturn, since MSUMI is skewed towards PV’s and 2 Wheelers it wont go into deep downturns like CV’s and the quarterly earnings was hit by the startup costs as the company’s new facilities project timelines have been changed this resulted in a negative operating leverage. Once these facilities are fully operational the earnings will be realized in the stock price.

      Thanks,
      Sudharsan
      1. 

         venkat praneeth

         January 25, 2025 at 4:28 pm

         I bought this stock when it was Rs 57 CMP, and now its below that, do you still recommend downward averaging? Also for a newbie, can you please explain, how the stock price is so low when the PE is still high? Is it because of lower profits?
         1. 

            Sudharsan S

            January 25, 2025 at 7:53 pm

            Hi sir, We recommended a average price of Rs.65.1 anything equivalent to or below this price is actually considered as a good entry point for this stock, Just because the PE is high and stock price is low does not mean its because of lower profits. You have to look at the number of outstanding shares in this case the company has 442 crores of outstanding shares so a market cap of 24321 crores/442 crores gives us a share price of Rs. 55 this number of outstanding shares are determined by company’s capital structure in future the company may split or consolidate shares that may increase or decrease the share price but that has no effect on shareholders wealth. A company’s PE cannot be determined as high or low just with numbers a company with a PE of 100 can be still considered cheap and a company with PE of 5 can still be considered as expensive it all comes down to the company’s growth rate. Hope this addresses your query.

            Thanks,
            Sudharsan
            1. 

               venkat praneeth

               January 25, 2025 at 11:56 pm

               It does thank you

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