Motherson Sumi Wiring lists after demerger; freezes at 5% lower circuit

The wiring harness business benefits from the mega trends (of premiumization, increasing use of electronics, and electrification) playing out in the Auto industry, resulting in an increase in content.

Shares of Motherson Sumi Wiring India (MSWIL), the domestic wiring harness arm of erstwhile Motherson Sumi (MSSL), were locked in the lower circuit of 5 per cent at Rs 62.70 on the BSE on Monday. In comparison, the S&P BSE Sensex was up 0.19 per cent at 57,469 points. The stock had hit an intra-day high of Rs 69.30, after it got listed at Rs 66 on the BSE.

On the National Stock Exchange (NSE), the stock was trading at Rs 62.45. It had hit a high of Rs 68.45 and a low of Rs 61.95 in intra-day trade so far. A combined 21.5 million equity shares had changed hands on the NSE and BSE.

"The equity shares of Motherson Sumi Wiring India shall be listed and admitted to dealings on exchange in the list of T group of securities", BSE said in a notice dated March 24, 2022. The record date for the de-merger was on January 17, 2022 with the shareholding of erstwhile MSSL in the ratio of 1:1.

MSWIL enjoys market leadership in the indian wiring harness industry, with an estimated market share of over 40 per cent. It enjoys access to world-class technology (JV between Sumitomo Wiring Systems and MSSL). MSWIL derives a lion’s share of its revenue from India and has limited direct exports.

Brokerage ICICI Securities believes the entity to command premium valuations pegged at Rs 70 per share. “With pure exposure play in domestic passenger vehicles (PV) industry, which is witnessing healthy demand prospects and content/vehicle slated to increase in electrification, we expect the entity to command premium valuations," adds the brokerage.

The wiring harness business benefits from mega trends (of premiumization, increasing use of electronics, and electrification) playing out in the Auto industry, resulting in content increase. "This, coupled with a strong JV partner and market leadership, has resulted in a strong operating performance by MSWIL, as reflected in the sustained higher growth than underlying industry volumes, industry-leading capital efficiencies, and strong balance sheet," said Motilal Oswal Financial Services in a stock update.