ICICI Direct is bullish on Minda Industries recommended buy rating on the stock with a target price of Rs 320 in its research report dated July 01, 2020.
ICICI Direct's research report on Minda Industries
Minda Industries (MIL) reported a subdued Q4FY20 performance. Consolidated revenues were at Rs 1,339 crore, down 10% YoY (4-W: 2-W at 48:52; OEM: aftermarket at 87:13). Consolidated EBITDA margins slid 320 bps QoQ to 9.1% tracking higher other expenses (includes MTM losses on forex of ~Rs 15 crore). Reported PAT for the quarter was at Rs 7.3 crore, hurt by fall in revenues, margins (down 340 bps YoY) and Rs 8.9 crore worth of exceptional charges for acquisition related expenses. For full year FY20, consolidated sales fell 7.5% YoY to Rs 5,465 crore, with margins down 100 bps YoY to 11.3% and reported PAT down 46% YoY to Rs 155 crore. We expect net sales, EBITDA, PAT CAGR of 9.8%, 14.2%, 30.4% CAGR, respectively, over FY20P-22E. We continue to like MIL for (1) its success in growing far ahead of ancillary pack & OEM clients over the years, (2) presence in emerging opportunities and (3) well diversified product and client base.
Outlook
We maintain BUY recommendation on MIL with a revised target price of Rs 320, valuing it at 12x FY22E EV/EBITDA i.e. implied 33x P/E (FY22E EPS). We await the brief contours of the proposed rights issue before incorporating the same in our estimates.
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