Emkay Global Financial has given Buy recommendation for Minda Industries with a target price of Rs. 840 in its research report issued on Sep 02, 2021

Emkay Global Financial’s report on Minda Industries

Minda Industries, founded in 1958, is the largest domestic supplier of Switches, Horns, Alloy wheels, Seating and Blow-molding. Further, it is the 2nd largest supplier of Airbags, Air filters, Speakers & Telematics, and the 3rd largest provider in Lightings segment. Minda is exposed to multiple growth drivers: 1) cyclical recovery in the 2W/4W segments; 2) market share gains, driven by import substitution in Switches and Alloy wheels; and 3) growing Content per Vehicle (CPV), led by premiumization and new product forays such as Sensors. Further, Minda is well-placed to benefit immensely from EV adoption over the long term, which should result in significantly higher ‘kit values’ compared to ICE vehicles. Revenues saw a 21% CAGR in FY11-21 vs. 2W+4W volume CAGR of 3%; we forecast 19% revenue CAGR over FY21-31E vs. industry volume CAGR of 8%. Our forecast of 50% EPS CAGR over FY22-24E is driven by a 22% revenue CAGR and a 240bps EBIT margin expansion. RoIC will likely surge to 24% in FY24E from 10% in FY21. We model average annual FCF generation of Rs4.2bn for FY21-24E, and expect the company to turn net-cash-positive by FY24E, from Rs5.3bn of pro-forma net-debt post its recent QIP.


Our Sep’22E TP of Rs840 is DCF-driven and implies forward P/E of 32x. Minda deserves to trade at premium valuations, given its exposure to the PV segment, long term upside from EV adoption and a sustainable upward re-set in return ratios.

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