Buy Minda Corporation Ltd for the Target Rs.700 By Emkay Global Financial Services Ltd
Overall growth momentum sustains; resilient margins
Minda delivered a strong Q2, with revenue accelerating to Rs15.4bn (+19% YoY vs 16% YoY in Q1FY26/9% in Q4FY25) driven by sustained traction in Wiring Harness (WH), Instrument Clusters, and EV product lines. EBITDA at Rs1.8bn with 11.6% margin (vs 11.3% Q1) was aided by operating leverage/improving mix. The management is confident of growth sustenance, and reiterated its ‘Vision 2030’ guidance (refer to Vision 2030 - Targets 3.5x revenue; >25% ROCEs). with revenue scale-up to Rs175bn and EBITDAM of >12.5%, highlighting a PV breakthrough in high-voltage EV WH, a strong export order in die-casting, and a sustainable ~16% margin profile at Flash. We revise FY26E/27E/28E EPS by 6%/7%/10%, factoring in the stronger margin expectations (mix+leverage) and improved Flash profitability, with modest revenue upgrades aiding support. We build in revenue/EBITDA/EPS CAGR of 18%/21%/31% over FY25-28E and raise our target multiple to 33x Sep-27E (vs 30x earlier) while revising up TP by ~17% to Rs700 (from Rs600); BUY.
Strong beat across parameters
Minda posted a strong Q2, with revenue at Rs15.4bn, up 19% YoY (vs Consensus/Emkay estimates of Rs14.7/14.4bn), led by a robust product portfolio, expanding customer base, and premiumization gains. EBITDA came in at Rs1.8bn (higher than consensus’/our estimates of Rs1.7bn) with margin of 11.6%, marking a 22bps YoY improvement. PAT was up 14% YoY/30% QoQ at Rs846mn (vs Consensus/Emkay: Rs688/747mn) on the back of better margin performance and increasing JV profit shares (mainly Flash).
Earnings Call KTAs
1) The auto industry kickstarted H2 on a positive note, aided by strong festive momentum, stable macros, and GST 2.0 reforms, with Minda outperforming the industry with 19% YoY growth led by segments like wiring harness (WH), instrument clusters, and EV products. 2) The mgmt highlighted its ‘Vision 2030’ targets of achieving a sustainable consol EBITDAM of >12.5% and revenue of Rs175bn by FY30 (~20-25% growth expected hereon). 3) WH: Minda holds >30% market share each in the 2W, CV, and Tractor WH segments; first meaningful breakthrough in PVs (a high-voltage EV WH order from one of India’s largest global e-PV OEMs) is underway. 3) ICD-Minda (strong in 2Ws/CVs) is scaling up its PV portfolio, aided by various global tech partners, for cockpit electronics. 4) Die-casting: Minda is adding large-tonnage machines to cater to EV/PV OEMs; capacity already in place for upcoming order cycles; exports (mainly EU) for the division form ~40-45%. 5) Smart-key solution: Minda highlighted rising adoption by Japanese and Indian OEMs across ICE/EV platforms, with smart key penetration to rise (25% by FY30 vs ~3-5% now). 6) Flash: EV revenue contribution at ~23%; rare-earth magnet supply issue affected Q2, albeit now resolved. EBITDAM of ~16% seen as sustainable for Flash. Flash, at its Poland Tech Centre, is developing magnet-less motors that are currently in the testing phase. 7) Sunroof: Secured first lifetime order for sunroof systems from a major PV OEM; SOP planned in Q1FY27, full ramp-through by FY27, peak volume expected in FY28. 8) Secured a significant order from a leading 2W OEM in switches.
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