Motherson Sumi Wiring India shares traded flat on May 22 after declaring its fourth quarter results on May 19. The fourth quarter revenues grew 12 percent year on year to Rs 1,864 crore, highest ever quarterly revenues. Earnings before interest, tax, depreciation and amortisation (EBITDA) declined 4 percent to Rs 209 crore. The net profits nearly tripled to Rs 138 crore versus Rs 46 crore in the corresponding quarter of last year.

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Also read: Motherson Sumi Wiring India Q4: Margins decline 200 bps, Profits tripple to Rs 138 crore

In an interaction with CNBC-TV18, GN Guaba, CFO and Anurag Gahlot, COO, Motherson Sumi Wiring said the fall in EBITDA margins in the fourth quarter was owing to a ramp up in costs of new models. The pressure on margins is expected to continue as supply chain challenges persist.

The auto component player was a supplier for 23 new passenger vehicles and commercial vehicles launches and 17 facelifts in FY23. Post covid, the company has established three new plants for which the costs are high, including manpower expenses. Guaba says "supply challenges persist and hence margins are expected to witness pressure". He further adds that the return on capital employed for Motherson Sumi Wiring India is targeted at excess of 40 percent.

Gahlot says he expects the company to add new customers in FY24, including in the electric vehicles industry. The company is a supplier to top passenger vehicle models in India like Hyundai, Tata, Maruti.

Street views various industry tailwinds from rising SUV mix, premiumisation of key customers like Maruti Suzuki India and electrification to augur well for Motherson Sumi Wiring India. Nomura maintains a Buy on the stock attributing to faster electric vehicle adoption in the country and the company's order wins.