Hold Minda Corporation Ltd For Target Rs. 600 by Axis Securities
EBITDA/PAT Beat Estimates; Fairly Valued at Current Price
Est. Vs. Actual for Q3FY25: Revenue – INLINE; EBITDA Margin – BEAT ; PAT– BEAT;
Change in Estimates post Q3FY25
FY25E/FY26E: Revenue: 0.4%/0.4%; EBITDA: 1.4%/-0.1%; PAT: 3.1%/-0.2%
Recommendation Rationale
* Long-term growth drivers: (1) Premiumization trend in legacy businesses like security access, driver information systems, wiring harnesses, die casting, and electronics. (2) New Products in EV, power electronics and EV charging stations. (3) Intelligent transportation systems in the EV bus segment. (4) other electronics, such as wireless chargers, telematics, etc.
* Strong Order Book: In 9MFY25, the total lifetime order book stood at Rs 6,000 Cr, reflecting an expanding product portfolio, product premiumisation, and rising demand for both IC and EV products across customers and segments. Out of the total order book, the company secured Rs 1,250 Cr lifetime order wins in Q3FY25 itself, with EVs accounting for over 25% of these orders.
* Robust EBITDA margins: On the back of a richer product mix led by premium 2Ws (both ICE and EV), better operating efficiencies, streamlining fixed costs, and component localisation initiatives, we expect EBITDA Margins to sustain between 11% to 12% in FY25/26E.
Sector Outlook: Positive
Company Outlook & Guidance: Going ahead, we expect strong demand in the 2W entrylevel segment, demand for utility vehicles in PV, gradual recovery in CVs/Tractors, and a revival in exports. These will be positive triggers for the company to outperform industry growth
Current Valuation: 30x FY27 EPS (unchanged)
Current TP: Rs 600/share (earlier Rs 535/share)
Recommendation: We recommend a HOLD rating (unchanged) on the company
Financial Performance: Revenue (inline) grew by 7% YoY but was down 3% QoQ, led by increased production volumes in the 3W/2W/PV segment, partly offset by lower volumes in the CV/Tractor industry and weak exports. EBITDA stood at Rs 144 Cr (6% Beat), up 11% YoY but down 2% QoQ. EBITDA margins (46bps beat) grew by 32bps/10bps YoY/QoQ based on the product premiumisation trend, increasing efficiencies and cost control efforts. PAT was reported at Rs 65 Cr (16% Beat), up 23%YoY and down 13% QoQ, mainly following the EBITDA, along with higher other income and share of profits from associates.
Outlook: We like Minda Corp's growth story, which is driven by new order wins and focuses on EVs. With a strong order book and the management’s confidence in outpacing industry growth (via organic/non-organic), we estimate a CAGR of 11%/15%/27% in Revenue/EBITDA/Adj PAT over FY24-27E.
Valuation & Recommendation: Based on the growth trajectory and healthy financials, we value the stock at a 30x multiple on FY27 EPS (unchanged) to arrive at a TP of Rs 600/share, implying an upside of 3% from the CMP. Because of the slower-than-expected recovery in exports, PV/CV industry volumes, and current valuations, we keep the rating unchanged at HOLD based on limited upside potential
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SEBI Registration number is INZ00016163
