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Steady margin performance

Exports subdued; domestic sales up 13% YoY

Minda Corporation’s (MDA IN) Q3 revenue rose 9% YoY but fell 2.5% QoQ to INR 11.65bn, slightly lower than estimated. Q3 EBITDA margin rose 20bps QoQ to 11.1%, on continued efforts to pare costs via automation/local sourcing. Q3 EBITDA grew 14% YoY but fell 1% QoQ to INR 1.3bn. 2W revenue rose 19% YoY, in line with 2W production growth YoY. PV revenue rose 9% YoY, beating PV production growth. Domestic revenue grew ~13% YoY. Exports dragged at 10%+ YoY.

MDA wins lifetime orders of INR 23bn in Q3; INR 89bn in 9MFY24

In Q3, MDA secured orders worth INR 23bn, with EV forming >30% of the orders won. Key order wins were in smart keys, die casting, clusters, DC-DC converters. MDA secured lifetime order wins of >INR 89bn in 9MFY24. It won lifetime orders worth >INR 4bn for smart keys for EV 2W and 4W, INR 4.5bn orders for LCV Wiring Harness from a CV OEM and first-time order win for tyre pressure monitoring system. It also won many orders in die casting products for EV batteries/ motor housing.

Valuations: Reiterate Accumulate, TP maintained at INR 460        

With first-mover advantage in EV products, MDA supplies to all major EV 2W firms. Its smart key solution is being adopted by ICE 2W OEMs, a positive in spiking content per vehicle with realization for smart key at INR 2,500+ versus INR 400-600 for traditional locksets. Localization rise in wiring harness and execution of new orders may expand margin. Expect FY23-26E revenue CAGR of 14% (ahead of 2W industry volume CAGR of 8%) and an EBITDA CAGR of 21%. Entering into new high-growth products (sun-roof) may prop valuation (monitor order wins).

Please refer LACE 2.0 (page no 108), dated 23 January 2024, wherein we had revised MDA to Accumulate from BUY (given ~22% run up in stock price over last three months) and its TP to INR 460 from INR 400 upon roll-forward to FY26E P/E and raised multiple to 24x (from 22x). We thus have an Accumulate on MDA with TP at INR 460 (unchanged) on 24x FY26E P/E.

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