Buy Minda Industries, target price Rs 1100: Axis Securities

Axis Securities has buy call on Minda Industries with a target price of Rs 1100. The current market price of Minda Industries Ltd. is Rs 891.7. Time period given by analyst is one year when Minda Industries Ltd. price can reach defined target.

Minda Industries Ltd., incorporated in the year 1992, is a Mid Cap company (having a market cap of Rs 25415.93 Crore) operating in Auto Ancillaries sector.

Minda Industries Ltd. key Products/Revenue Segments include Electronic Components, Sale of services, Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 2438.29 Crore, up 11.14 % from last quarter Total Income of Rs 2193.91 Crore and up 8.50 % from last year same quarter Total Income of Rs 2247.17 Crore. Company reported net profit after tax of Rs 126.70 Crore in latest quarter.

Investment Rationale
Minda Industries Ltd. (MIL) has been outpacing the industry growth on account of an increase in its kit value per vehicle in both 2W/4W segments through the introduction of new products, both on the mechanical and technology sides. Given its success in developing import substitution products, it is well-positioned to capture the business opportunities offered by the ‘Atmanirbhar Bharat’ move in the Auto sector. THe brokerage continues to like Minda Industries as a play on Auto, especially with rising electrification and premiumization. The return ratios are expected to inch up (with room to expand post capacity utilization improvements) as NPM improves along with improving asset turn. However, it cuts FY23E/ 24E EPS estimates by 2%/12% for each building in lower industry production and near-term RM pressure. It maintains BUY rating on the stock with a revised target price of Rs 1,100 (Rs 1,250 earlier), valuing the stock at 32x FY24E EPS, indicating an upside of 32% from the CMP.

Promoter/FII Holdings
Promoters held 67.47 per cent stake in the company as of 31-Mar-2022, while FIIs owned 9.77 per cent, DIIs 13.22 per cent.