Minda Corporation is one of the leading motorcycle (2W) lockset companies, with a market share of about 36% in 2009 and trading at a discounted price to the auto parts industry, Elara Capital said in a report. increase.
The brokerage firm will begin compensation for Minda Corporation at a target price of 213 rupees, which is more than 50% higher than the 139 rupees recorded on October 25.
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Minda Corporation shares are on the buyer’s radar. Shares have risen more than 55% so far in 2021, up more than 100% compared to 30% in the past year, and up 50% on the Nifty 50 over the same period.
Minda Corporation has developed a patented smart key solution for electric vehicles (EV) -2W Original Equipment Manufacturer (OEM). The value of the kit is 2,500-4,000 rupees (significantly higher than the 400-600 rupees of a traditional lock set).
“We have received orders from EV start-ups and existing OEMs, demonstrating our superior technological capabilities. Safety and security revenue CAGR exceeds the industry’s volume CAGR of 13%, and FY21-24E is about 17%. We anticipate that it will increase the value of premium kits and gain business share (SOB) from TVS Motor and Honda Motorcycles & Scouters India, “the report said.
FCMs believe that the die casting business will benefit from the trend towards lighter weight and increased market share with the China plus One model adopted by OEMs and Tier-1 suppliers.
MDA will benefit from orders for turbocharged parts from global Tier 1 companies like BorgWarner. “We expect the die casting revenue CAGR to be about 21% compared to FY21-24E,” he said.
Beneficiaries of migration
Periodic recovery has the potential to drive the wire harness business. Wire harness space could benefit from cyclical recovery in the 2W, passenger car (PV), and commercial vehicle (CV) industries, recording 12%, 18%, and 30% volume CAGR in FY2009 May be-24E.
“The Information and Connectivity Systems division expects the FY21-24E to record a CAGR of 19% revenue,” he added.
Long runway: Advance into EV components
Participants in the Production Linked Incentive (PLI) scheme, MDA, bag orders from major EV 2W OEMs for DC-DC converters, battery chargers, telematics, and vehicle control units (VCUs) and pack EV components. Under development.
Potential kit values for EV components are 16.000 to 18,000 rupees (4,000 rupees for ICE), localization themes, and pioneer advantages are suitable for MDA.
Elara Capital will begin compensation for Minda Corporation with a purchase valuation and target price of Rs213 based on 20x the price-earnings ratio of September 2023. This is a 15% discount on the auto parts industry and a 10% premium on its own historical average.
“We expect a revenue CAGR of 20% for 21-24E (more than 12% of the 2W industry volume CAGR) and an EBITDA CAGR of 33% over the same period. Our scenario analysis shows that risk compensation is favorable. The increase in content per vehicle as the industry moves to EVs could be an important catalyst for further reassessment, “he added.
(Disclaimer: The views / suggestions / advice presented here in this article are by investment experts only. ZeeBusiness advises readers to consult an investment adviser before making financial decisions. It is recommended.)
Value Pick: 100% in one year!The reason this auto parts maker is trading to the industry at a discounted price could be a 50% increase
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