Motherson Sumi Wiring India Ltd (NSE: MSUMI) Q3 2025 Earnings Call dated Feb. 06, 2025
Corporate Participants:
V.C. Sehgal — Chairman
Mahender Chhabra — Chief Financial Officer
Pankaj Mital — Chief Operating Officer and Executive Director
Analysts:
Jinesh Gandhi — Analyst
Siddhartha Bera — Analyst
Gunjan Prithyani — Analyst
Raghunandhan — Analyst
Unidentified Participant
Shirish Guthe — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Motherson Sumi Wiring Limited Q3 FY ’25 Earnings Conference Call hosted [Operator Instructions] Please note that this conference is recorded.
I now hand the conference over to Mr. V.C. Sehgal for his opening comments.
V.C. Sehgal — Chairman
Thank you. Good evening, ladies and gentlemen. Thank you for joining the results conference call of MS. I am pleased to announce that the Board has approved the results for quarter three of financial year 2025. This year is turning out to be a very exciting one for the Indian automotive industry with the OEMs launching a slew of new models across EV and ICE platforms. With feature-rich content, this has augured well for us with the company outpacing the industry by approximately 6% attributed to the favorable product portfolio of increased content with platform mix. The Indian PV industry grew by about 3% year-on-year whilst registering a degrowth of minus 8% on a sequential basis. Similarly, two-wheeler industry demonstrated 8% growth year-on-year with a degrowth of 5% sequentially. While CV industry specifically for high-duty — heavy-duty and medium-duty trucks remained a weak on a yearly basis, growth of about 4% on a sequential basis. In this context, the company has delivered revenues of INR2,300 crores for quarter three in which the new greenfields contributed a approximately INR80 crores EBITDA remained stable for the quarter-ending excluding greenfields at INR278 crores, representing a 6.1% growth on a year-on-year basis. This shows an improved profitability of the business excluding the greenfields. The three greenfields are progressing in different stages, fully ramping-up, while and Khalkoda are set to be on-stream H2 2026. These are new facilities and will cumulatively drive an annual revenue boost of approximately INR2,100 crores, marking approximately 25% growth over financial year ’24. Revenues are the baseline. The team has done well to secure businesses with marquee OEMs like Marti, Suzuki, Mahindra, Tata Motors across EV and ICE platforms exclusively for new ones. I would like to reiterate that these are not just replacements of mid-cycle update but absolutely new models. Remains a preferred supplier for the new-age vehicles by OEMs. The team has worked hard in developing these solutions for the customers and along with the robust localization plan. Since new facilities are in different stages of completion, certain costs have been expensed upfront. This is — there is a negative net greenfield startup cost impact of about INR40 crores and EBITDA and INR32 crores on the PAT, which is expected to be negative. Net greenfield startup costs is expected to stabilize as production comes on-stream with the new plants. We continue to have conversations with our customers for some of the pain sharing as on some of the costs associated with expansions. Our capex guidance for the year remains at approximately INR200 crores, have extensed about INR13 in nine months, continues to be a debt-free company. With this, I would like to conclude my remarks. I have Bhaman, Pankaj, Anurag and Mahindra with me to answer any questions that you might have. Thank you, and over to you.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Jinesh Gandhi from AMBIT Capital. Please go ahead.
Jinesh Gandhi
Yeah, hi, sir. Couple of questions from my side. One is, you talked about INR40 crore impact at EBITDA level from the greenfield. Just to clarify, this is for third quarter and on quarterly basis or for the full year.
V.C. Sehgal
Mahender, can you answer that question, please?
Mahender Chhabra
Yeah, sure. So this INR40 crore EBITDA impact is for the third quarter from the three new greenfields that we discussed — that we mentioned.
Jinesh Gandhi
Okay. And what would be revenue contribution from these three greenfield? You mentioned EBITDA of INR80 crore. What would be revenue contribution from these three plants?
Mahender Chhabra
Yes. Yeah. So as of now where the ramp-up has already started, the revenue is given the revenue is about INR80 cr. And all — I mean, number of these plants are still in the ramp-up phase and we have given the SUP schedule when the commercial production would start. So wherever there is a revenue, the cost — the revenue is about INR80, but the cost is there for the other plants as well where the revenue is yet to come.
Jinesh Gandhi
Got it. And the third question pertains to — we have seen some of the new edge competitors, new edge OEMs talking about the advanced technologies, including cables and including cables instead of pliers on the wiring harness side. Any views we have on those technologies on that I mean the yesterday we won OEM, UH OEM had showcase that product. Any views on that?
Mahender Chhabra
Jinesh, can you please repeat your question?
Jinesh Gandhi
So yesterday one of the New Edge OEM had showcased advanced firing harness where it was based on up cables which are much smaller in length and lighter in weight versus a normal electric wiring hardness, which would have weighed about 4 kgs, this was about 800 grams. Now any views on such emerging technologies? I’m sure we are also working on it, but any sense on how does it — what does it — how does it influence our business.
Pankaj Mital
You’re talking about the new edge cars which are being launched in India or this is about…
Jinesh Gandhi
The new age primarily EV two-wheelers is Ola, you still showcase their motorcycles in that they showcase these capable now instead of harnesses.
Pankaj Mital
So you’re talking about the two-wheelers. So these are like these three plants which we explained are about the new cars which are coming in. So we have given an entire schedule about these launches. They are from Marti Suzuki, Mahindra and Mahindra and Tata Motors in particular.
Jinesh Gandhi
Okay, got it. I’ll pause back-in queue for more questions.
V.C. Sehgal
Also, Jaysh, I think new things cannot be experimented in all that. They try and showcase all the new technologies, but this is product liability and all that is huge in this business. So it’s not a telephone that they are doing. This is a car, car or two-wheelers, these are human life dependent. So there’s always a lot of research which has gone into this, but I think as one — as said, we’ll come back if there is a thing.
Jinesh Gandhi
And if it is, we are also in the same boat. Thanks and all the best.
Operator
Thank you. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead.
Siddhartha Bera
Yeah. Thanks for the opportunity, sir. Sir, my first question is on the growth. We have seen revenue growth, which has been much higher than the industry volume growth in the past. That gap seems to have come down quite a lot in the last couple of quarters. So is this more reflective of the current content increases being lesser than in the past or — and is there any changes in-market share also in the industry or we are largely seeing similar market-share?
V.C. Sehgal
Normally we don’t guide on-market share. We think market shares for tombstones. But look, this is a rapid-changing scenario. And it’s really very difficult to come out with some credible numbers and all that because it’s changing very fast. Pankat, you want to add something more on that?
Pankaj Mital
Yeah. And basically, it’s also the model mixes which happen. And as you would see from our presentation, the new plants which we are launching as per the customer volumes, these are all new-age vehicles, they should contribute significantly to the revenue of around INR2,000 plus crores, INR2,100 crores annually. Also, some and Group of them are taken care of by the joint-venture company. So if you look at from the India perspective, has been very well-entrenched and we are grateful to our customers for a partnership in the new vehicles which are being launched in the market.
Siddhartha Bera
Got it, sir. Will it be possible to share the EV segment high voltage wiring harness contribution in the current quarter’s revenues or probably in the last nine months.
Pankaj Mital
See, generally the revenue coming from EV vehicles have been in-between 3% to 4% approximately, I mean, yeah, ballpark.
Siddhartha Bera
Understood. And these three greenfields, which are starting now, what will be the peak revenue potential from these plants going ahead?
Pankaj Mital
Yeah, it’s about INR2,100 crores as per the forecasts, which were given by the customers. If they increase further, then it could be more.
Siddhartha Bera
Okay. And it will be a mix of both high and low voltage wiring harness?
Pankaj Mital
Yes.
Siddhartha Bera
Okay. So this ramp-up — so start-up costs we should expect should start normalizing from quarter-four onwards or do you think the start-up costs may contain for some more time before this ramp-up plays out.
Pankaj Mital
There is a presentation on which we have given when our SOPs are happening. So start-up costs will start to us plants in May. So some launches are happening now and in the Gujarat, it will be in Q1 of ’26 and some launches are happening — SOPs are happening in Q2 of ’26. So around that period Q2 ’26, Q2, Q3, that’s the time when it should get normalized completely over a period of time.
Siddhartha Bera
Got it, sir. Sir, you have said for third quarter it is INR40 crores. Will it be available for the last nine months because in the first and second quarters also we had some start-up costs. So for the nine months, did we have the impact in EBITDA?
Pankaj Mital
So it’s also given in the presentation Mr. Mahender…
Mahender Chhabra
Yeah. So for the nine months, it’s about INR95 crores.
Siddhartha Bera
Got it, sir. Thanks a lot. I’ll come back-in the queue.
Operator
Thank you. The next question is from the line of Gunjan Prithyani from Bank of America. Please go ahead.
Gunjan Prithyani
Thanks for taking my questions. I just had a follow-up on this on the three new plants that you mentioned. Now, these are all-in newer locations, right, Pune, you know, the Gujarat, all these locations are new. I just wanted to get a sense that when you are expanding into these new geographies, is the profitability or margin going to be very similar to what our core business has had in past. The reason I ask is because it’s a labor-intensive industry and there may be labor laws which are different expense, which is different on discount. So just want to get a color on whether the profitability remains same when you — when you get you get into newer locations.
V.C. Sehgal
Pankaj and Mahender can take this.
Pankaj Mital
Yeah, ma’am, for us, we have been in Pune for a very long-time. So initially there have been brownfield expansions and greenfield expansions in Pune. So Pune has been since 201997 or something, we have been there. So it’s all-time in Gujarat also. We have been there in Sanam. So this is an expansion in a new land because the volumes are growing. So we are setting up more facilities. Similarly, if you look at, it is not very far from — within the NCR region where we have been there since the beginning — since the foundation of the company. And when we go to new regions also, we take care because every time we have been expanding, the company has more than 30 manufacturing sites today. It has expanded very well and having a concept of some other plant which supports any new plant which comes in with people getting trained and people being treated respectfully in every geography where we are. So MSVL operates its plants in every region of the country, wherever the car makers are there, whether it be it in Chennai or Bangalore or Musharrath, Pune, NCR region everywhere. So whether it’s good practices and human practices that has been operating the plant sufficiently in all the regions.
Gunjan Prithyani
Okay. I understand that. And the other thing that you mentioned that we are in conversations with the OEMs to share the pain on the start-up cost or is that a practice which is usual? I would expect that these contracts are only when the revenue start to accrue. So is there something that we can expect that these cost hit could come down before the — before the plant ramp-up happens. I’m not quite sure of the comment that you made initially.
Pankaj Mital
Ma’am, there are certain costs which get incurred during the development period. There are certain changes which happened during the development period. So that’s why that comment is there. So there are things which get discussed with the customers and they get shared.
Gunjan Prithyani
Okay. All right, get it. Thank you so much.
Operator
The next question is from the line of Raghunandhan from Nuvama Research. Please go ahead.
Raghunandhan
Thank you, sir, for the opportunity. And also thank you for sharing the details of the upcoming plants and customers. Very helpful. Sir, two questions. Firstly, on the high voltage wiring harness. With the new plants coming in and that should also indicate higher focus on our localization? And if you can talk a little bit about how the efforts have been in terms of reducing the import content, increasing localization and could there be any targets you would like to share going forward.
V.C. Sehgal
Thank you, Pankaj, over to you.
Pankaj Mital
Well, there are localizations which have happened in terms of the cables for high voltage harnesses. And as far as the connectors are concerned, some of them have also been localized already. There’s still there are few which are imported. And as we see newer models coming in, especially coming from global car makers, there may be still some more import contents as they have been designed outside, but they all have a direction that over a period of time, they would want to localize or as they launch more models they would like to localize.
Raghunandhan
And imports, the currency movement of late is turning their rupees depreciating continuously. On the UST INR movement, would we have arrangements with customers to pass on the impact?
V.C. Sehgal
Yes, sir, we have almost every customer, so yes, sir.
Pankaj Mital
Yes, sir.
Raghunandhan
Thank you, sir. Thank you so much.
Operator
The next question is from the line of Avish Pansali from Chanakia Capital Services. Please go ahead.
Unidentified Participant
Yeah, thank you for the opportunity. Just would it be possible to give the breakup of revenue as per vehicle in categories like commercial passenger and two-wheeler?
V.C. Sehgal
Mahender, we have given that in the…
Pankaj Mital
We provide this data once in a year-on annual basis. And this was in the last annual report, you can go through that passenger vehicle is approximately 59% approximately and two-wheeler is 10% to 12% and then commercial vehicle is also 10% to 12%. So bipurfacation is given on the annual report. You can refer that please.
Unidentified Participant
It’s same for this quarter also, are there any changes?
Mahender Chhabra
No, there is once in a peer only.
Unidentified Participant
Okay. Thank you.
Operator
Mr. Avish, does that answer your question?
Unidentified Participant
Yeah, it’s fine. Thank you.
Operator
Thank you. The next question is from the line of Jinesh Gandhi from AMBIT Capital. Please go ahead.
Jinesh Gandhi
Yeah. Hi, sir, for these three plants, what would be our total capex listed for these three plants? And what kind of manpower addition would be happening for these three plants. I’ll run this?
V.C. Sehgal
Mahendar?
Mahender Chhabra
So in terms of capex, depending on the size, it’s about 40 crore to 60 that we spend on one plant and this doesn’t include land and building, which we take on these from SAMIL.
Jinesh Gandhi
Got it. And a total manpower addition would be what roughly about 15,000, 16,000 people or lesser than that between the three plants.
Pankaj Mital
I think these plants are — as the volumes are given and for the product we are making, they — these are sort of little large plants. So between 2,000 to 2,500 manpower will be involved in these three plants individually, each of them.
Jinesh Gandhi
Okay. Got it. Okay. Great. Thanks.
Operator
Thank you. [Operator Instructions] The next question is from the line of Shirish from Nippon India Mutual Funds. Please go ahead.
Shirish Guthe
I’m trying to understand the correlation between copper prices and so if I look at the industry growth and add it up with the copper prices, somehow your growth seems much lower than the number which I was looking at. So can you explain why really is there a difference because Y-o-Y copper prices are up 12% plus industry volume growth also not too bad. So our growth in that context looks a little low. If you can elaborate on that, sir, please?
V.C. Sehgal
Look, your calculations are based on so what on your calculations or it’s some kind of a standard or something?
Shirish Guthe
Sir, just looking at the copper there was a fair bit of inflation. So just want to understand if — like how are you looking at-market shares? Are the market-share stable or was there a difference between the production and the wholesale numbers that we are looking at for the industry?
V.C. Sehgal
And I think we’ve already said that our growth is higher than that the market. But you know, we can’t just answer on speculation that it looks lower. It looks higher. It’s very difficult for us to quantify what you’re saying on what basis you’re comparing.
Shirish Guthe
Copper price inflation, copper price inflation was 12% and the industry growth would have been close to — so if I could draw parallel from that 59% comes from PV, 12% from, on that basis, the industry would have grown at least like a double-digit kind of a number, close to like a low-double-digit. So based on that, yeah, so just trying to understand.
Pankaj Mital
So the industry growth, if you will see is about 3%.
Shirish Guthe
Okay, sir. Okay. Understood. Thank you.
Operator
Thank you. [Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. V.C. Sehgal for his closing comments.
V.C. Sehgal
Thank you. Yeah. I think the Board congratulated the team. I think they’ve done a phenomenal job including the marketing people and all that three new plants in three new geographies even though we are present there, it’s still a huge mammoth task, task but the companies has done that. The prospects look phenomenal even in the coming months and all that. We keep you informed and thank you very much and wish you all a very good week ahead.
Operator
[Operator Closing Remarks]