Prime stock recommendation: A wired solution for future mobility

1. 

   haidinesh_78

   October 15, 2024 at 12:41 pm

   Hi,
   This stock was recommended when the price Rs. 74.15. Now the price is Rs. 64.5 but the stock doesnt have a “Best Buy” recommendation. Has something changed in this stock recently?
   Regards,
   Dinesh
   1. 

      N V Chandrachoodamani

      October 17, 2024 at 8:09 pm

      Welcome your query sir,

      To clarify, nothing has changed and the stock still remains a “buy”

      The best buy feature stocks based on parameters such as earnings, valuation, market volatility, news & events, etc
      The auto sector seems to be losing some steam recently and data points are not encouraging, though festival season is still on. This has turned the sentiment a bit negative towards the sector and in turn auto ancillary stocks

      Consequently, we felt like it can’t feature in “best buy” for this month

      But the stock still remains a “buy” and it is becoming attractive for value seeking investors
      Nothing changes otherwise

      Hope this clarifies

      Thank you
      1. 

         haidinesh_78

         October 18, 2024 at 5:03 pm

         Thanks a lot for your reply. Much appreciated.
2. 

   Maxim

   July 13, 2024 at 7:34 pm

   A good article. Thanks a lot. I have one comment as I have been working in the automotive industry. The whole idea of new vehicle EE architecture is to reduce wiring harness and to enable software define vehicles. And the car OEMs are fast adapting to new vehicle EE architecture much faster than expected which eventuallu would reduce the complex wiring in the vehicles. Considering your concern no.3, I see there are lot of challenges ahead for this company after 3 years.
   1. 

      Sudharsan S

      July 15, 2024 at 8:48 am

      Hi sir,
      Absolutely, the impact of new vehicle EE architectures on wiring complexity is a valid concern. However, let’s delve deeper and explore how this shift might present opportunities for MSWIL, considering their strategic partnership with Sumitomo Wiring Systems (SWS).

      Mitigating the Impact of Reduced Wiring Complexity:

      While new architectures aim to reduce overall wiring complexity, the focus is evolving towards specialized solutions for critical functions. Here’s where SWS’s ownership stake in MSWIL becomes a significant advantage.

      Sumitomo Wiring Systems’ Strategic Plans: SWS’s Mid-Term Management Plan 2025 (25M) prioritizes areas directly aligned with these needs:
      High-Speed Communication Sub-Wire Harnesses/Connectors: Essential for efficient data transfer within zones and between zonal gateways in new architectures.
      Zone ECU/Central Gateway (CGW): Aligns with the growing importance of zonal gateways, which require specialized wiring solutions.
      Looking ahead, SWS’s Vision 2030 (30V) further emphasizes high-speed communication harnesses as a key focus area. This aligns perfectly with the future of automotive electrical systems.
      *(You can read more about this in Sumitomo Wiring System’s website in the Corporation Strategy section).

      MSWIL’s Potential for Growth:

      SWS’s ownership stake in MSWIL grants them potential access to these cutting-edge technologies. This technology transfer can propel MSWIL into new business areas crucial for future growth:

      Expertise in High-Speed Communication: By leveraging SWS’s advancements, MSWIL can develop expertise in high-speed communication solutions, a critical area for future vehicles.
      Market Positioning: This expertise positions MSWIL as a leader in wiring solutions for next-generation vehicles with zonal architectures and software-defined features.

      This opens doors for growth beyond traditional wiring harnesses. MSWIL can tap into new markets for high-speed communication components and cater to the evolving needs of the automotive electrical systems landscape.
      Btw, going by the pace of development and adoption of this new architecture, it is unlikely to impact our near term growth projections for MSWIL.
      I hope this explanation clarifies your concern.
      Thanks,
      Sudharsan
3. 

   vishal.asrani

   July 10, 2024 at 7:11 pm

   A very well-written analysis on MSWIL.
   Concern #3 mentioned above seems to be really big as it limits both the international and domestic opportunities for MSWIL. Are there any mitigating factors here such as clarification from the parent about a non-compete for the domestic market or allowing MSWIL to pursue international clients? In the absence of this, what is truly the addressable market remaining for MSWIL?
   1. 

      Sudharsan S

      July 11, 2024 at 1:07 pm

      Hi Sir,
      Despite the concern, the opportunity for MSWIL comes from the organic growth of the domestic passenger car industry combined with the increasing content per vehicle opportunity if EV sales and manufacturing were to accelerate in India (EVs need 2-2.25X more wiring harness than ICE vehicles). So, we have only projected 15% growth rate for the Co considering these factors.

      One noticeable thing that we mentioned in the report is that Sumitomo Wiring, the technology partner for MSWIL, has been selling its stake in parent Samvardhana Motherson. So, future technology sharing from Sumitomo Wiring may be coming for MSWIL only. Whether this can throw open the shut opportunities with Hyundai or overseas customers need to be seen in the case of EVs where wiring harness requirements are different, I Hope this explanation clarifies your concern.

      Thanks,
      Sudharsan
4. 

   madhavan.sridharan1969

   July 2, 2024 at 12:22 pm

   Hello
   I think the stock code is MSUMI and not MSWIL. Can you please confirm
   Thanks
   1. 

      Sudharsan S

      July 2, 2024 at 1:30 pm

      Hi Sir,
      Yes, the stock code is MSUMI. We use MSWIL as a shorthand for Motherson Sumi Wiring India Limited. I hope this clarifies.

      Thanks

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