View Full Version : Minda Industries Ltd (NSE:MINDAIND) (BSE:532539)

08-12-2015, 08:36 AM
Minda Industries Limited is an India-based company, engaged in manufacturing of automotive components. The Company operates through the following divisions: Switch, Lighting, Acoustic, Battery, Auto Gas, Fuel Cap and LED. The Switch division holds develops products for two wheelers, three wheelers and off-road vehicles. The Lighting division caters to the two wheelers, three wheelers, off road and four wheelers with focus on original equipment manufacturer (OEM) supplies. The Acoustic division designs and produces Automobile Horns for optimum sound performance and high durability. The Battery division is having a facility to manufacture batteries for automobiles. The Auto Gas division is manufacturing LPG/CNG kits and components for OEMs as well as for aftermarket. The Fuel Cap division is manufacturing fuel tank cap for 4 wheelers. The LED division supplies Solar LED Lights to Government Agencies as well as channel sales are manufactured, fabricated and commissioned.

Official Website: www.mindagroup.com

08-12-2015, 08:37 AM
Operating performance meets expectations, Net profit beats estimates on lower depreciation and higher profits from associates: Minda Industries Ltd (MIL)ís 1QFY2016 operating results have come in line with our estimates. The net profit came in ahead of our expectations, aided by lower depreciation and higher profits from associate companies. Despite a subdued scenario in the automotive OEM industry, for both two-wheelers and passenger vehicle (PV)s, MIL reported a healthy double-digit top-line growth for the quarter, beating our estimate of 7% growth. Its strategy of new product development and higher sourcing to existing clients enabled MIL to outpace the industry. The operating margin, at 6.4% (marginally below our estimates of 7%), was slightly under pressure due to pricing pressure by OEMs. However, lower-than-anticipated depreciation coupled with improved performance of associate companies led to higher profitability for MIL, during the quarter. The net profit, at Rs13.7cr, was ahead of our estimate of Rs11.4cr. Outlook and valuation: MIL has evolved from being a switch player to an ancillary supplier having a diverse product range viz switches, horns, lightings, fuel caps, and cylinder valves. The company is aiming to further enhance the product range and move up the value chain by introducing new products like alloy wheels and electronic horns. We expect MIL to clock a robust 15% top-line CAGR over the next two years. Further, operating leverage and improvement in margin of subsidiaries would lead to a CAGR of 25% in earnings over FY2015-17. MIL is our preferred pick in our auto ancillary universe, given its diversified profile and attractive valuations. We have retained our earnings estimates given the in line operating results. We maintain our positive view on the stock with an Accumulate rating and maintain our target price of Rs652 (based on 12x FY2017 earnings).

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