Buy Minda Corporation Ltd for the Target Rs 850 by Emkay Global Financial Services Ltd
Minda Corp (MDA) clocked a robust 1Q, with revenue growth accelerating to 33% yoy (3QFY26/4QFY6: 24%/29% yoy; 6-7% above our/street estimates), led by robust performance across verticals. EBITDA rose 35% yoy, with EBITDAM down 40bps qoq to 11.5% (ahead of our/street estimates: 11- 11.2%), aided by 70bps gross margin expansion. MDA highlighted robust demand across segments/verticals and expects the current momentum to continue in 9MFY27 and FY28, driven by wiring harness (premiumization and HV cables driving kit value) Instrument Clusters (multiple TFT cluster orders across PVs/CVs/2Ws entering SOP over coming quarters), and Die Casting (export-focused Pune plant ramp-up). Flash Electronics revenue rose 43% yoy, driven by new product launches, entry into new segments, and higher share with existing customers; MDA is confident of strong 20–24% growth with 16– 17% EBITDAM in the longer term. MDA also highlighted back-to-back pricing arrangements with OEMs (1-2 quarter lag), which should deliver 11.5-12% EBITDAM over 9MFY27. MDA reiterated its Vision 2030 (Rs175bn group revenue) and is confident of achieving it. We raise FY27E/28E EPS by 3-5% to reflect stronger-than-expected revenue and margin performance, lift our TP by ~10% to Rs850 from Rs775, based on 33x Jun-28E PER, and maintain BUY.
Strong topline print; margin
hit curtailed by stable gross margins Minda clocked its highest-ever consol revenue at Rs.18.5bn, up 33% yoy (vs Emkay: 17.2bn), led by strong growth in wiring harness, vehicle access, and instrument clusters, coupled with continued focus on product premiumization. EBITDA came in at Rs2.1bn (up 35% yoy/4% qoq), with EBITDAM down only 40bps qoq to 11.5% (ahead of Emkay estimates of 11%) owing to better gross margin. APAT stood at Rs823mn (up 26% yoy).
Earnings call KTAs
1) Growth was supported by robust auto volumes, higher share of business with existing customers, new customer additions, premiumization, and exports, with the management expecting demand momentum to sustain across ICE/EV and domestic/export markets.
2) The company added ~Rs25bn of lifetime orders in 1QFY27, providing strong revenue visibility, while wiring harness, clusters, and vehicle access revenues grew ~42%, ~42%, and ~45% yoy, respectively.
3) Minda VAST grew 22% yoy, with EBITDA margin improving to 8.4%, and helped increase PV contribution to ~19%; the management sees further PV content gains from sunroofs, power tailgates, HV harnesses, EV die-castings, clusters, and electronics.
4) Flash Electronics reported 42% yoy revenue growth, led by ~90% growth in EV revenues, which now contribute ~30% of Flash revenue, while the company targets 20-24% growth and 16-17% long-term EBITDA margins.
5) MDA expects consolidated EBITDA margin at 11.5-12% in FY27, with commodity passthroughs and operating leverage providing support, and targets 12.5% by FY30.
6) FY27 capex is guided at ~Rs4bn, with group utilization at ~77-80% and capacity additions underway.
7) New initiatives including Turntide motor controllers, sunroofs, and switches are progressing, while cross-selling between Minda and Flash is gaining traction.
8) The management remains confident of achieving Rs175bn revenue by FY30, supported by organic growth, premiumization, exports, new products/JVs, and inorganic opportunities.
For More Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354
