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Stock To Buy: Revenue Grew By 8% YOY, Buy For 28.29% Returns, Says Emkay Global

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The brokerage firm, Emkay Global has put a 'buy' rating on the stock of Minda Industries for a target price of Rs 1,135 for a period of 12 months (1 year). The stock has the potential to gain 28.29% during the estimated period of time.

 

Stock Outlook

The Current Market Price (CMP) of the Minda Industries after closing on 25th May 2022 is Rs 884.70. Today, the stock opened at Rs 852.65 and closed at Rs 884.70 after gaining 5.91%. The brokerage set a target price of Rs 1,135, with the set target price and the CMP of the stock, the stock is estimated to generate 28.29% returns in 12 Months.

Witnessed growth in revenue

Witnessed growth in revenue

Revenue grew by 8% YoY to Rs24.2bn (est.: Rs23.7bn), slightly above estimates. Revenue has increased in lighting, castings and other segments, while it has declined in the switches, acoustics and seating segments. EBITDA margin contracted by 210bps to 11.4% (est.: 11%), above estimates. The company has indicated a partial pass-through of commodity inflation. Overall, PAT grew by 4% to Rs1.4bn (est.: Rs1.2bn), above estimates due to higher operating profit, other income and profit from associates. Profit from associates rose 37% to Rs295mn.

Order wins continued in Q4FY22
 

Order wins continued in Q4FY22

  1. Received orders for new generation switches for sunroof, cruise control, paddle and vehicle stability from PV OEM and export orders from an Italian 2W OEM.
  2. Lighting order book up by Rs1bn to Rs3.5bn led by tail lamp order from an Indian OEM and LED lamps
  3. Received orders for speakers and tweeter from an Indian OEM
  4. Received a seating order from E-bus OEM.
  5. Received an order for accelerator pedal position sensors from American 2W OEM
  6. Received orders for chargers from existing OEMs.

Management reiterated that EV business revenue is expected to increase from less than Rs 1bn in FY22 to Rs15-20bn in 5-6 years, catering to both domestic and overseas markets.

Emkay Global's comments and Views on target Price, and key risks

Emkay Global's comments and Views on target Price, and key risks

"Retain Buy with a Target Price of Rs 1,135. Minda Industries is focusing on strengthening its own R&D capabilities and exploring tie-ups and acquisitions with a focus on PACE opportunities (Personalization, Autonomous, Connected and Electrification)," the brokerage has said.

According to the brokerage, the key risks are lower-than-expected growth in the underlying automobile industry, increase in competitive intensity, regulatory changes allowing cheaper imports, supply constraints at company and customer-end, slower premiumization rate, and adverse currency rates.

About The Company - Minda Industries Ltd

About The Company - Minda Industries Ltd

Minda Industries Limited, the flagship company of the UNO MINDA Group is one of the most diversified auto component manufacturers in India. The company's market cap is Rs 25,424 crore. It is a technology leader in the auto components industry and a leading tier-1 supplier of proprietary automotive solutions to OEMs. The Group is headquartered in Manesar, Haryana. It has engineering, research, and development centres in Manesar, Pune & Sonepat.

Disclaimer

The stock has been picked from the brokerage report of Emkay Global. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.

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