4 MINDACORP share price target reports by brokerages below. See what is analyst's view on MINDACORP share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
We have revised our FY21 estimates (as presented below) downwardsand expect recovery in Q3FY21as demand for automobiles returns back slowly. We maintainBUY rating on the stock as its FY21 revenues are protected from regulatory led growth in its wiring business. We value Minda Corp at 10X FY22E EPS of Rs8.8and arrive at a target price of Rs88, a 29% upside from CMP.
Strong Quarter margin wise: Minda Corp. Ltd. had a strong quarter and continued to perform better than the automotive industry it caters too with revenue declining by ~13% v/s its OEM’s declining by 18% combined. Domestic market contributed to 68.3% of total revenue, with major sales coming from 2/3 wheeler and PV segment. Exports contribution to revenue came in at 31.7% of total revenue. Aftermarkets grew by double digits despite fall in overall revenues. On the margin front, there was strong improvement of about ~200 bps QoQ in the safety systems and die casting business, its interiors and plastics business also cut losses and showed EBITDA margin improvement of ~120 bps while its wiring harness business saw a decline of ~50 bps owing to BSVI transition challenges. Management noted that about 320 bps of the near 400 bps improvement YoY is due to business improvement and 80 bps is a one off and expect EBITDA margins to stay near ~10%. Its subsidiary performance remained volatile with profit share coming in at Rs 4.75 cr v/s Rs 10.5 cr YoY.
We are apprehensive about Minda’s growth and profitability in FY20 in the wake of unprecedented domestic slowdown and KTSN challenges with possible overhangs in Q1FY21 as well. Accordingly, we downgrade revenue estimate and expect Minda Corp to post revenues at a CAGR of 3.5% (10% earlier) and profits at CAGR of -2% (15% earlier) over FY19-FY21E. However, we also take cognizance of the fact that Minda Corp’s stock price has over corrected (down 47% in FY20 itself) and Minda Corp is still wellpositioned (ex KTSN) in the industry owing to high entry barriers and being a diversified player in auto ancillary industry, uptick in its Mechatronics business and sticky clientele. We therefore maintain a BUY in Minda Corp. at reduced P/E multiple of 14XFY21E (5 year PE average -1 STD) to arrive at a target price of Rs 99 (28%upside).
We estimate Minda Corp to post revenues at a CAGR of 10% and profits at 15% over FY19-FY21E. Minda Corporation is well positioned in the industry owing to high entry barriers and being a diversified player in auto ancillary industry, strong brand name, sticky clientele, acquisitions and JVs contributing to top-line as well as bottom-line, strong management, and thus deserves premium valuations. We value Minda Corp. at 16x FY21E given the growth prospects to arrive at a target price of Rs 158 (35%upside).
With better capacity utilization, benefit of operating leverage and implementation of BS-6, we expect EBIDTA margins to stabilize at ~10.7% over FY20/21E from 9.5% in FY19 thus translating to earnings growth of 26% CAGR over FY19-21E. At CMP, MCL is trading at a PE of 11.8x FY21E earnings. Further, on the back of (i) strong growth expectations ahead of BS-6 (from Q3FY19), (ii) correction in stock price by 20% in the past three months and (iii) cheap valuations; we maintain our ‘Accumulate’ recommendation on the stock with a target price of Rs. 151 (at 15x FY21E).
We believe MCL is set to assemble the demand going forward with implementation of BS-VI norms, new product development and increasing focus on technology. We assign a P/E multiple of 19x to the FY20 estimated EPS of INR 9.10 to arrive at a target price of INR 173. Currently it trades at a fair valuation and with the present price correction of 30% from Jan, 2019 offers a good entry point. We recommend a ‘BUY’ on the stock.
We retain our valuation for the company at a P/E of 14.0x of FY21E EPS of Rs. 12.2 (based on 3-year Avg fwd P/E) for a target price of Rs. 171. The event included a detailed presentation about the offerings of the company along with business strategies. They exhibited some of their products which comprised of both primary and upcoming products. They also showcased products associated with electric vehicles.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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