1
Nov 16, 2017
Minda Corporation Ltd
Recommendation (Rs.)
CMP (as on Nov 16, 2017) 170
Target Price 189
Previous Target Price 112
Upside (%) 11
Stock Information
Mkt Cap (Rs.mn/US$ mn) 35583 / 547
52-wk High/Low (Rs.) 173 / 85
3M Avg. daily volume (mn) 1.2
Beta (x) 0.9
Sensex/Nifty 33107 / 10215
O/S Shares(mn) 209.3
Face Value (Rs.) 2.0
Shareholding Pattern (%)
Promoters 70.2
FIIs 1.7
DIIs 5.8
Others 22.3
Stock Performance (%)
1M 3M 6M 12M
Absolute 18 59 47 73
Relative to Sensex 17 54 36 38
Source: Bloomberg
Relative Performance*
Source: Bloomberg; *Index 100
For private circulation only. For important information about Karvy’s rating system and other disclosures refer
to the end of this material. Karvy Stock Broking Research is also available on Bloomberg, KRVY<GO>,
Thomson Publishers & Reuters
Exhibit 1: Valuation Summary
YE Mar (Rs. Mn) FY15 FY16 FY17 FY18E* FY19E*
Net Sales 19706 24455 29620 25078 29374
EBITDA 1855 2233 1981 2481 2938
EBITDA Margin (%) 9.4 9.1 6.7 9.9 10.0
Adj. Net Prot 871 935 1143 1385 1723
EPS (Rs.) 4.2 4.5 5.5 6.6 8.2
RoE (%) 20.9 20.8 15.8 19.3 19.9
PE (x) 40.8 38.0 31.1 25.7 20.6
Source: Company, Karvy Research, * Joint ventures not consolidated in the revenue for FY18E and FY19E due to IND AS
Company Update
India Research - Stock Broking
HOLD
Consistent Order Book Built-up......
Minda Corporation Ltd (MCL) posted revenue of Rs. 6550 Mn during Q2FY18 up
by 12.6% QoQ/19.6% YoY driven by higher export orders and increase in share
of business with their clients. EBITDA margins came in at 11.5% at Rs. 750 Mn
much due to inventory build-up as the company procured Rs. 1600 Mn worth of
exports during Q2FY18 and PAT reported Rs. 421 Mn as compared to Rs. 230 Mn
in Q1FY18. Depreciation for the quarter came in at Rs. 188 Mn which is 16.2%
higher than Q1FY18 due to higher investments in expansion projects towards
MINDA KTSN and Die-Casting plant further leading nance costs to increase to
Rs. 88 Mn in Q2FY18 as compared to Rs. 76 Mn in Q1FY18. H1FY18 revenue
stood at Rs. 12367 Mn up by 19.3% YoY as compared to Rs. 10365 Mn in H1FY17.
PAT for H1FY18 posted Rs. 651 Mn, quite at on YoY terms, impacted by higher
depreciation and nance costs.
Growth to be majorly driven by export orders through their Safety and
Security Systems (SSS) division: Revenue from SSS during Q2FY18 was
around Rs. 2948 Mn higher by 10.0% as compared to Rs. 2680Mn in Q1FY18
driven by volume growth which has increased the contribution from this segment to
the overall revenue to 45.0% as compared to 43.0% in the previous quarter. Driver
Telematic systems growth is majorly driven by MINDA Stoneridge which recorded
revenue of Rs. 4586 Mn in H1FY18; and in the Interior Systems, MINDA VAST
posted Rs. 1346 Mn. However, due to IND AS accounting standards, these two
joint ventures along with MINDA Furukawa will not be consolidated in the top-line
which has been implemented in our estimations for FY18E and FY19E.
Acquisitions to keep up to the technological advancements: MCL’s
acquisition of EI labs to get hold of the technology related to connected mobility
indicates the company is setting itself to take advantage of the opportunities in
automotive space going ahead. Through EI labs, MCL has procured government
order for EESL (Energy Eciency Services Ltd) to source 10,000 electric cars.
Also, Minda Corp has secured a life time order (~5 years) worth Rs. 12000 Mn
across their segments.
Valuation and Outlook
We value the company at P/E 23.0x FY19E EPS with an upwardly revised target
price of Rs. 189 representing “HOLD” with an upside potential of 11%.
Industrials - Electrical Equipment
Minda Corporation Ltd
Bloomberg Code: MDA IN
Analyst Contact
Jagannadham Thunuguntla
040 - 3321 6296
jagannadham.t@karvy.com
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Minda Cor poration Ltd
Sensex
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Nov 16, 2017
Minda Corporation Ltd
Exhibit 2: Q2FY18
YE Mar (Rs. Mn) Q2FY18 Q1FY18 QoQ % Q2FY17 YoY % H1FY18 H1FY17 YoY %
Turnover 6550 5817 12.6 5476 19.6 12367 10365 19.3
Expenditure 5800 5374 7.9 4953 17.1 11174 9353 19.5
EBIDTA 750 443 69.3 524 43.2 1194 1012 18.0
Depreciation 188 161 16.2 149 25.9 349 290 20.2
Interest 88 76 16.3 73 21.0 164 132 24.4
Other Income 22 25 (14.3) 82 (73.9) 47 111 (57.8)
Share of Prot from JV 69 59 17.6 95 (27.6) 127 107 19.1
PBT 565 290 95.0 479 17.9 855 807 5.9
Ta x 144 60 142.4 89 61.7 204 162 25.9
Adjusted Prot 421 230 82.7 390 7.8 651 645 0.9
EBITDA Margin (%) 11.5 7.6 384 bps 9.6 189 bps 9.7 9.8 (11) bps
EBIT Margin (%) 8.6 4.8 375 bps 6.8 175 bps 6.8 7.0 (13) bps
Net Prot Margin (%) 6.4 4.0 246 bps 7.1 (70) bps 5.3 6.2 (96) bps
Source: Company, Karvy Research
Exhibit 3: Revenue segmentation
Source: Company, Karvy Research
Exhibit 5: Subsidiaries & Joint Venture Revenue for H1FY18
Source: Company, Karvy Research
Exhibit 4: Revenue segmentation by end-user market
Source: Company, Karvy Research
38%
37%
39%
39%
43%
45%
48%
47%
47%
47%
33%
32%
14%
16%
14%
14%
24%
23%
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Safety Security Systems
Driver Telematics
Interior Systems
Passenger
vehicles
20.0%
2/3 wheelers
38.0%
Commercial
vehicles
32.0%
After-market
10.0%
4421
4264
2788
2293
2249
1346
1174
680
515
0
1000
2000
3000
4000
5000
Minda
Corporation
Minda SAI
Minda KTSN
Minda
Furukawa
Minda
Stoneridge
Minda VAST
Minda
Automotive
ASEAN
Business
Minda
Autoelektric
Subsidiaries & Joint Venture Revenue (Rs. Mn)
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Nov 16, 2017
Minda Corporation Ltd
Key Takeaways of Conference Call:
Received ~Rs.12000 Mn worth of life time orders (~5 years) constituting as follows:
Safety and Security Systems: Rs. 6000 Mn
Driver Information and Telematic: Rs. 3600 Mn
Interior Systems: Rs. 2400 Mn
MCL is focusing on increasing export sales where they have procured Rs. 1600 Mn of export orders during Q2FY18. The
company expects exports to reach Rs. 5000 Mn by FY20E driven through Safety and Security Systems products.
The new die-casting plant set-up in Pune commenced operations in Q2FY18.
A new production line for manufacturing control cables is expected to be set-up at their Pant Nagar plant.
The company acquired EI Labs; a connected mobility and IoT (Internet of Things) solution provider during Q2FY18 in view
of the following synergies:
To cater to connected mobility market in domestic and foreign markets
To provide IoT solutions in the automotive space
Through EI Labs, Minda has secured a government project in liaison with EESL for 10,000 electric vehicles.
MCL to invest Rs. 250 Mn for their Spark Minda Technical Centre, Pune.
On the operations front, the company is now focusing on turning around their joint venture, Minda Furukawa and also
optimizing total employee expenditure.
The share of revenue from commercial vehicles has increased to 32.0% in H1FY18 as compared to 23.0% in FY17 due to
increase in share of business with Original Equipment Manufacturers (OEMs) like Ashok Leyland and Mahindra & Mahindra.
The company has adopted IND AS accounting standards from April 1, 2017 wherein their joint ventures Minda Furukawa,
Minda VAST and Minda Stoneridge will not be accounted in their consolidated revenues.
Key Risks:
Increasing commodity prices.
Threat of operational risk due to ongoing acquisitions coupled with debt on their books.
Geo-Economic Risks
Exchange rate uctuations
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Nov 16, 2017
Minda Corporation Ltd
Financials
Exhibit 6: Income Statement
YE Mar (Rs. Mn) FY15 FY16 FY17 FY18E
#
FY19E
#
Revenues 19706 24455 29620 25078 29374
Growth (%) 23.6 24.1 21.1 (15.3) 17.1
Operating Expenses 17851 22222 27640 22596 26436
EBITDA 1855 2233 1981 2481 2938
Growth (%) 47.6 20.4 (11.3) 25.3 18.4
Depreciation & Amortization 603 745 847 734 722
EBIT 1253 1489 1134 1748 2216
Other Income 227 173 463 94 108
Interest Expenses 395 334 409 368 437
PBT 1085 1328 1187 1473 1887
Tax 271 366 331 442 566
Adjusted PAT* 871 935 1143 1385 1723
Growth (%) 9.8 7.3 22.2 21.2 24.5
Source: Company, Karvy research, * Includes Minority Interest & Associate Prot
# Joint ventures not consolidated in the revenue for FY18E and FY19E due to IND AS
Exhibit 7: Balance Sheet
YE Mar (Rs. Mn) FY15 FY16 FY17 FY18E
#
FY19E
#
Cash & cash Equivalents 441 882 571 764 360
Trade Receivables 3176 4353 4999 2971 6365
Inventory 2308 3210 4136 1828 5157
Loans & Advances 1944 1869 1733 2031 2379
Other assets 197 23 161 160 160
Net Block 5861 7318 8455 7421 7299
Investments 289 52 102 2300 2300
Total Assets 14216 17707 20157 17476 24021
Trade Payables 3076 4256 5190 2477 6504
Short & Long term Provisions 417 607 624 522 611
Short & Long term Borrowings 4451 4591 5548 4908 5830
Other Liabilities 1364 1944 1936 1691 1674
Total Liabilities 9309 11398 13299 9598 14619
Shareholders Equity 607 607 607 *416 416
Reserves & Surplus 4059 5066 5899 7462 8986
Total Networth 4907 6311 6858 7878 9402
Total Networth & Liabilities 14216 17707 20157 17476 24021
Source: Company, Karvy Research, * Due to redemption of cumulative preference shares
# Joint ventures not consolidated in the revenue for FY18E and FY19E due to IND AS
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Nov 16, 2017
Minda Corporation Ltd
Exhibit 8: Cash Flow Statement
YE Mar (Rs. Mn) FY15 FY16 FY17 FY18E FY19E
PBT* 1109 1465 1005 1473 1887
Depreciation 603 745 847 734 722
Interest expense 343 334 409 368 437
Others (166) (5) (216) (94) (108)
Tax Paid (241) (414) (341) (442) (566)
Inc/dec in Net WC 1394 133 (557) 978 (2973)
Cash ow from operating activities 3042 2258 1147 3017 (601)
Inc/dec in capital expenditure (809) (914) (1629) (1300) (600)
Inc/dec in investments 0 (667) (529) (1845) 403
Others 297 (16) 39 1694 108
Cash ow from investing activities (512) (1597) (2119) (1451) (89)
Inc/dec in borrowings (1946) 124 947 (641) 923
Dividend paid (Incl Tax) (97) (82) (126) (365) (199)
Interest paid (341) (332) (404) (368) (437)
Cash ow from nancing activities (2383) (290) 417 (1374) 286
Net change in cash 147 371 (554) 193 (404)
Source: Company, Karvy Research, *Includes exceptional item
Exhibit 9: Key Ratios
YE Mar FY15 FY16 FY17 FY18E FY19E
EBITDA Margin (%) 9.4 9.1 6.7 9.9 10.0
EBIT Margin (%) 6.4 6.1 3.8 7.0 7.5
Net Prot Margin (%) 4.5 4.4 3.2 5.5 5.9
Dividend Payout Ratio (%) 9.6 11.2 9.2 10.6 9.7
Net Debt/Equity (x) 0.9 0.7 0.8 0.5 0.6
RoE (%) 20.9 20.8 15.8 19.3 19.9
RoCE (%) 14.0 15.4 10.2 14.1 15.8
Source: Company, Karvy Research
Exhibit 10: Valuation Parameters
YE Mar FY15 FY16 FY17 FY18E FY19E
EPS (Rs.) 4.2 4.5 5.5 6.6 8.2
DPS (Rs.) 0.4 0.5 0.5 0.7 0.8
BVPS (Rs.) 22.3 27.1 31.1 37.6 44.9
PE (x) 40.8 38.0 31.1 25.7 20.6
P/BV (x) 7.6 6.3 5.5 4.5 3.8
EV/EBITDA (x) 21.9 18.2 20.5 16.4 13.8
EV/Sales (x) 2.1 1.7 1.4 1.6 1.4
Source: Company, Karvy Research
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Nov 16, 2017
Minda Corporation Ltd
Stock Ratings
Absolute Returns
Buy : > 15%
Hold : 5 - 15%
Sell : < 5%
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