Emkay Global Financial's report on Minda Industries
Q4 EBITDA declined by 9% yoy to Rs2.8bn, 5% above our estimates owing to a higherthan-expected gross margin. Revenue grew by 8% to Rs24.2bn (est.: Rs23.7bn), slightly above estimates due to higher revenues in switches and acoustics. We expect growth momentum to continue over FY22-24E, with a revenue CAGR of 22%, driven by 1) a cyclical upturn in underlying PV/2W segments; 2) higher content/vehicle in core businesses, such as switches, lightings and acoustics; 3) improving presence in alloy wheels, sensors and controllers; and 4) growing content/vehicle led by EV penetration. We build in an FY22-24 earnings CAGR of 51%. RoIC is likely to expand from 11% in FY22 to 20% in FY24E, supported by improved profitability in the core and emerging segments. Net debt-to-equity should improve from 0.2x in FY22 to 0.1x in FY24E.
Outlook
Recommend Buy with a DCF-based TP of Rs1,135 (unchanged), based on 38x Jun’24E EPS (earlier 40x Mar’24E EPS). We reduce the target multiple to account for an increase in the cost of equity.
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