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MSWIL outperformed on all fronts due to richer product mix and stable RM prices. Revenue during the quarter jumped by 19.8% YoY to Rs.22.33bn vs est of Rs.26.1bn. Margin for the quarter came at 13% (+182bps YoY/+67bps QoQ) supported by operating leverage and lower RM cost. EBIDTA jumped by 39% YoY to Rs.2.91bn vs est of Rs.191bn and Net profit jumped by 38% YoY to Rs.1.91bn vs est of Rs.2.1bn.

Management expects going forward margin expansion would be supported by higher volume, cost reduction efforts and price recovery. Further the company is planning to increase capacity by 10-15% which is expected to operational in Q1FY25 in order to meet customer demand. Capex guidance for FY25 would be around Rs.200cr.

*As PV segment is the largest revenue contributor for MSWIL, MSWIL are present in most of the top-selling models. Currently, PV demand is strong due to factors such as a preference for personal mobility, a shift towards SUV vehicles and new product launches. Further improving industry wise mix towards premiumization will increase the content value for the PV segment which has started reflecting in MSWIL revenue, where the company has delivered better than industry growth during the quarter. As the majority of MSWIL's revenue comes from the PV segment, we expect the company to experience steady growth in the PV segment over the next 2-3 years.

* Automotive industry is increasing capacity and premiumisation: MSWIL is wellpositioned to take advantage of the rapidly changing trends in the automotive market. The growing desire for personalized vehicles results in an increased number of wiring harnesses per vehicle, leading to higher content per vehicle. The rising inclusion of connectivity features in cars, drives demand for premium SMART harness components. As the need for sustainable technologies and stricter safety and emission standards increases, the value per harness also rises, along with the company's offerings of advanced electronics and EV solutions. E4W content value is high around 1.7-2x and for E2W it would be around 4-5 times. Regarding EV and alternative powertrains, MSWIL is fully prepared to deliver high-voltage solutions, wiring harnesses, and components.

* View and Valuation: We expect MSWIL to benefit from the increasing electrification of vehicles and the transition to EV and hybrid powertrains, leading to an increase in content value per vehicle. We are optimistic about MSWIL's growth story, supported by various other factors: 1) its product portfolio is immune to the transition to EVs; 2) it has a strong parentage background (SWS & MSS) providing access to technology; 3) MSWIL has ready solutions for Hybrid/EVs; 4) expanding capacity: 5) the company boasts a high RoCE profile. We value the company based on FY26E EPS (37x) to arrive at the TP of Rs.74 and maintain BUY rating.

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