Minda Corporation Ltd. share price target

Minda Corp reported revenue and profit growth ahead of our estimates for Q2FY18. Total income surged 12.6% (not comparable due to change in accounting standard) and Net profit increased by 82.7% on yoy basis. The topline was supported by growth in volumes across all the segments, whereas profit increased due to better product mix, reduction in operational cost and higher volumes.

Minda Corporation Meeting Note: Minda Corp management met with 10 fund managers / analysts of various institutional investors comprising of Mutual Funds and Insurance Companies on April 10, 2017 at Hotel Sofitel, Mumbai in the event organized by Karvy Stock Broking Ltd. Below are some insights from the meeting.

Minda Corp reported poor set of numbers, partially hit by demonetization, higher material costs in its subsidiary Minda Furukawa and pre-operative expenses related to the Mexico plant and technical centre in Pune. As a result, though Net revenue increased by 10%, Net profit slumped by 36.3% on YoY basis.

Temporary Issues in Subsidiary Deplete Operating Margins:Q3FY17 consolidated revenue posted Rs. 7230 Mn up by 10.1% YoY and declined by 7.6% QoQ, where EBITDA significantly dropped by 69.6%/63.8% in QoQ/YoY majorly led by one-off expenses in the raw material costs in their joint venture Minda Furukawa Ltd and some pre-operating expenses in their green field Mexico plant and Spark Minda technical centre (Pune).

Minda Corporation is amongst the leading automotive component companies with a diversified product portfolio that encompasses Safety, Security & Restraint Systems; Driver Information & Telematics Systems and Interior Systems for auto OEMs. These products cater to 2/3 wheelers, Passenger Vehicles, Commercial Vehicles and after-market.

Driver & Telematic Segment Continues to Be The Main Growth Driver: Minda Corporation consolidated business grew by 26.9% (YoY)/12.5% (QoQ)driven by Minda Stoneridge and Minda SAI revenues which grew at an average of 12-15% YoY during H1FY17 driven by increase in share of business with OEMs. Standalone business grew at 8.7% (YoY) and 9.9% (QoQ).

Minda Corporation consolidated business grew by 31.7% (YoY) / 7.9% (QoQ) driven by Minda Stoneridge revenues which grew at ~ 25.0% (YoY) while standalone business grew at 12.6% (YoY) and remained flattish with -0.8% (QoQ), which the company attributes it for the seasonality. Similarly, EBITDA margins have improved by 75bps to 8.4% in Q1FY17 as compared to last quarter as they had one-off expenses in Q4FY16; while on YoY basis, EBITDA margins have shrunk by 53bps impacted by their joint ventures and Minda Furukawa on account of pricing constraints and higher imports. However, initiatives like alternate sourcing and localization are expected to revive EBITDA margins going forward in FY18E.

Minda Corporation Ltd is the leading automotive components manufacturer & flagship company of Spark Minda, Ashok Minda Group. Company has a diversified product portfolio that encompasses Safety Security, Driver Information & Interior Systems for automobile sector across the globe. These products caters to two wheelers, three wheelers, passenger vehicles, commercial vehicles & aftermarket. Company has 32 state of the art manufacturing...

Minda Corporation Ltd (MCL) is a leading supplier of security systems & locksets and wiring harness to the 2 wheeler and 4 wheeler OEMs. MCL is in to manufacture of electronic and mechanical speedometers with market leadership in commercial vehicles and tractor segments. MCL has 30 plants spread across India as well as in Europe (three...

Minda Corporation Ltd, along with its subsidiaries, is present across all segments of the automobile industry, which mainly manufactures lock systems, wiring harness, die-casting and interior plastic products.