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MSWIL, in Q2FY25 delivered decent performance on revenue front but lower than
expected on margin front. Revenue during the quarter increased by 10.3% YoY to
Rs.23.26bn vs est of Rs.22.51bn. Margin for the quarter came at 10.7% (-125bps YoY/-
20bps QoQ) impacted by higher other expenditure attributed to new plant setup. EBIDTA
decreased by 1.3% YoY to Rs.2.5bn vs est of Rs.2.54bn and Net profit decreased by 2.4%
YoY to Rs.1.52bn vs est of Rs.1.6bn.

Company is planning to increase capacity by 10-15% which is expected to operational in
Q1FY26 in order to meet customer demand. Capex guidance for FY25 would be around
Rs.200cr.

*  Since the PV segment is the largest revenue contributor for MSWIL, the company is
present in most of the top-selling models. Currently, PV demand is muted and inventory
level is high with the dealers, the PV industry in FY25 is expected to grow on low single
digit pace. However, improving industry wise mix towards premiumisation will increase
the content value for the PV segment which will support MSWIL revenue to deliver better
than industry growth in FY25. 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 well-
positioned 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 ofadvanced electronics and EV solutions. E4W content value is high around 1.7-2x and for E-
2W it would be around 4-5 times. Regarding EV and alternative powertrains, MSWIL isfully 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 Sep-FY27E EPS (37x) to arrive at the TP of Rs.72.
Recommend HOLD.