Motherson Wiring

Motherson Sumi Wiring India Limited (MSWIL) achieved a significant milestone in Q4 FY26, with its yearly revenues surpassing INR10,000 crores for the first time. The company reported a robust sales revenue growth of approximately 33% year-on-year, considerably outperforming the broader market's single-digit growth. Despite this strong top-line performance, the company experienced a 2.9% compression in gross margins during the quarter, primarily due to an 18% sequential increase in copper prices.

MSWIL's greenfield facilities are progressing well, contributing over INR400 crores to the company's revenue in Q4 FY26. Utilization rates vary across these new plants: Kharkhoda is operating at approximately 80% capacity, Navagam at around 60% (with a model ramping up in Q1 FY27), while the Pune plant is at a lower ~50% utilization due to volumes not meeting forecasts. Management projects these greenfield facilities to achieve an annualized revenue run rate of approximately INR2,000 crores once customer volumes reach projected levels.

The company faced significant headwinds from rising copper prices, which increased by 18% sequentially in Q4 FY26. This led to a marginal 2% impact on the bottom line, despite pass-through arrangements with customers. The pass-through mechanism operates with a time lag, typically 3 months for major customers and up to 6 months for others, meaning the Q4 price increases are expected to be offset in Q1 FY27 volumes. Copper constitutes 24-28% of the raw material cost.

MSWIL continues to maintain a debt-free status since its inception, supporting its preparedness for future growth. The company incurred approximately INR190 crores in capex in the last fiscal year, with similar numbers projected for FY27 (around INR200 crores). This capex is strategically allocated towards greenfield expansion driven by customer plans, automation and digitization initiatives, and replacement capex for existing plants, all based on firm customer orders.

Despite the transitional impact on gross margins from commodity prices, MSWIL remains a ROCE-focused company, achieving a ROCE of close to 40% for the year. Management emphasized that while greenfield plants are currently under ramp-up and incurring start-up costs (approximately INR127 crores for the full year), they are expected to reach breakeven and positive profitability within a couple of quarters as volumes stabilize and reach higher utilization levels.

The company experienced strong manpower growth this year, exceeding 20%, primarily due to the establishment of new greenfield facilities and the associated upfront loading of manpower for skill development. Management is bullish on the Indian automotive market, anticipating continued growth and new orders. They expect sales to grow nicely in the next year, which should help normalize the growth in manpower costs and lead to better overall performance.