KRChoksey recommended accumulate rating on Minda Industries with a target price of Rs 377 in its research report dated August 25, 2020.
KRChoksey's research report on Minda Industries
Minda Industries Ltd (MIL) reported consolidated revenue decline of 71% YoY and (down 68.8% QoQ) to INR 4171.10 Mn, led by COVID-19 shutdown. Two wheeler industry volumes declined by 78.5% and four wheeler industry volumes are down by 84% YoY. Gross profit margin for the quarter came in at 42.05%. For Q1FY21, EBTIDA loss was INR 714.90 Mn as compare to positive EBITDA of INR 1722 Mn in corresponding quarter last year. EBITDA margin was negative at 17.14% for Q1FY21 compare to positive EBITDA margin of 11.96% in Q1FY20. Loss from joint venture / associates was INR 162.10 Mn compare to profit of INR 59 Mn in Q1FY20. Net loss for the quarter was INR 1183.30 Mn compare to profit of INR 534.80 Mn in corresponding quarter last year. EPS for the quarter stood at INR (4.51) as against 2.04.
Outlook
We expect EBITDA margin to improve by 187bps to 13.20% in FY22E due to cost control measures, operating leverage and increasing share of value added products in overall mix. We expect overall Revenue/EBITDA to increase at a CAGR of 8.42%/17% for the year FY20/22E. AT CMP of INR 342 the stock is trading at PE of 27x FY22 EPS of INR 13, we apply a P/E multiple of 29x to the FY22EPS of INR 13 to arrive at a target price of INR 377 per share (previous target INR 323 per share) an upside of 10% over CMP. Accordingly, we change our rating from “Buy” to “Accumulate” on the shares of Minda Industries Ltd.
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