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IDBI Capital
Minda Industries (Buy)
CMP: ₹294.5
Target: ₹345
We believe recently launched products (airbags/ RPAS/ filters) and upcoming products/technology (controllers/sensors/Harita seating) especially on adding technological products would help Minda Industries Ltd (MIL) to grow its business by keeping pace with the new government regulations and policies. We like MIL’s effort of to grow double the rate of the sector growth by existing products, premiumisation of the existing products, adding more value to the existing components and systems which are adding continuously to MIL’s product offering.
We expect consolidated revenue to decline -8 per cent/-12 per cent in FY20E/FY21E and expect about 18 per cent growth in FY22 on account of growth in auto sales. We believe additional revenue from Harita seating business, addition of sensor plant from Q1FY21 onwards, filter business and 2W alloy wheel plant would help MIL to improve its revenue further in difficult times. We also believe recently launched products (airbags/RPAS/filters) and upcoming products/ technology (controllers/sensors/Harita seating) specially on adding technological products would have much better margins which would help MIL to improve its financials.
We value the company at a EV/EBITDA multiple of 13x and expect further re-rating on the stock on the back of premiumisation of the existing products, adding more value to the existing components and systems, and next-gen products.
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