Minda Industries Absolute : ADD Relative: …...Minda Industries Absolute – ADD Relative – Overweight 10% ATR in 14 Months May 24, 2018 Analyst: Ashutosh Tiwari [email protected]

May 24, 2018 Analyst: Ashutosh Tiwari [email protected] (+91-8128694112) Page 1 of 1

Before reading this report, you must refer to the disclaimer on the last page.

Minda Industries Absolute : ADD

Relative: Overweight

4QFY18 Result: Estimate (), TP (), Rating () Regular Coverage 10% ATR in 16 Months

Earnings growth momentum to continue, strong play on premiumization in autos Auto Parts

© 2018 Equirus All rights reserved

Rating Information

Price (Rs) 1,284

Target Price (Rs) 1,449

Target Date 30th Sep'19

Target Set On 23rd May'18

Implied yrs of growth (DCF) 25

Fair Value (DCF) 1,118

Fair Value (DDM) 168

Ind Benchmark BSEAUTO

Model Portfolio Position LONG

Stock Information

Market Cap (Rs Mn) 111,747

Free Float (%) 25.98 %

52 Wk H/L (Rs) 1358/535.8

Avg Daily Volume (1yr) 134,586

Avg Daily Value (Rs Mn) 130

Equity Cap (Rs Mn) 174

Face Value (Rs) 2

Bloomberg Code MNDA IN

Ownership Recent 3M 12M

Promoters 71.1 % 0.1 % -3.0 %

DII 6.7 % -0.6 % 3.7 %

FII 8.2 % 0.5 % 4.8 %

Public 14.0 % 0.1 % -5.5 %

Price % 1M 3M 12M

Absolute -4.6 % 14.1 % 213.2 %

Vs Industry 0.0 % 12.4 % 199.3 %

GABRIEL -17.1 % -18.7 % 41.1 %

SUPRAJIT -14.1 % -2.2 % 32.3 %

Standalone Quarterly EPS forecast

Rs/Share 1Q 2Q 3Q 4Q

EPS (17A) 2.1 4.9 3.8 4.2

EPS (18E) 3.2 3.7 3.5 3.9

MNDA surprised positively yet again, with strong numbers at both standalone (sales/

EBITDA: +26%/+57% yoy) and consolidated levels (sales/EBITDA: +53%/+62% yoy). It was

the first quarter of consolidation of Mindarika as a 51% subsidiary vs. a 27% associate

company earlier; even on adjusting for this, sales/EBITDA grew strongly at 31%/38%

yoy. With the addition of Mindarika, new alloy wheel capacity at Gujarat and JV

contribution added over the last 1.5 years should keep the growth momentum strong

over next three years. Air bags entity TG Minda would also be consolidated as a 48%

subsidiary from 2QFY19, and should contribute significantly in FY20E. Considering the

outperformance, we upgrade our FY19/20E EPS by 10%/12% yoy while rolling over to a

Sep’19 TP of Rs 1,449 (Mar’19 TP of Rs 1,240 earlier) set at 33x Sep’19 (30x FY20) EPS.

Mindarika, alloy wheels and TG Minda to help maintain growth momentum:

Mindarika (MRPL) became a 51% subsidiary from Jan’18, and FY19 will be the first full

year of consolidation. MRPL is the leader in the domestic 4W switch market with a

share of >55%. FY18 sales for the company stood at Rs 7.3bn, and we expect MRPL to

grow at a 14% CAGR over FY18-FY21. With commissioning of the new alloy wheel

capacity of 60k at Gujarat, we expect sharp growth for Kosei Minda (largest 4W alloy

wheel company in India) as well. In Apr’18, MNDA announced acquisition of a stake in

TG Minda, the second-largest airbags company in India with total sales of Rs 4.8bn in

FY18 (including other products as well). TG Minda is expected to see very strong

growth from FY20 due to regulatory changes which make air bags compulsory.

Strong play on premiumization of cars due to futuristic product portfolio: Besides

alloy wheels and air bags, MNDA offers reverse parking systems (to become compulsory

from Jul’19) through its JV with TTE, speakers through JV with Onkyo, and filters

through JV with Roki (market share to grow post BS-VI implementation, when

requirements become stringent). MNDA is also working closely on sensors and other

vehicle electronic products, and we expect something to come up in the future.

MNDA’s biggest advantage is its relationship with OEMs like MSIL, which makes it

preferred partner for any automotive technology supplier planning to enter India.

EBITDA margins improve to 12%+ over last few quarters on higher growth in better-

margin segments: High growth in better-margin segments like alloy wheels, castings

and blow molded parts has improved margins to 12%+ over last few quarters. Addition

of MRPL should also help as its EBITDA margins are higher than company average.

Change in Estimates

Current Change (%)

Rs Mn FY19E FY20E FY19E FY20E

Sales 58,131 65,746 5.0% 4.4%

EBITDA 7,216 8,175 8.0% 7.3%

PAT 3,467 4,133 10.1% 11.8%

EPS 40.1 47.8 10.1% 11.8%

Consolidated Financials Rs. Mn YE Mar FY18A FY19E FY20E FY21E

Sales 44,706 58,131 65,746 75,015

EBITDA 5,338 7,179 8,203 9,446

Depreciation 1,649 2,009 2,341 2,563

Interest Expense 351 497 407 272

Other Income 334 353 400 495

Reported PAT 3,150 3,441 4,150 4,995

Recurring PAT 2,720 3,441 4,150 4,995

Total Equity 13,916 16,435 19,547 23,281

Gross Debt 5,429 5,429 3,929 2,429

Cash 1,595 1,370 2,269 3,908

Rs Per Share FY18A FY19E FY20E FY21E

Earnings 31.5 39.8 48.0 57.8

Book Value 161 190 226 269

Dividends 2.8 3.8 4.8 5.8

FCFF -21.3 8.2 37.7 47.0

P/E (x) 40.8 32.2 26.7 22.2

P/B (x) 8.0 6.7 5.7 4.8

EV/EBITDA (x) 21.9 16.3 14.0 11.8

ROE (%) 22 % 23 % 23 % 23 %

Core ROIC (%) 15 % 16 % 17 % 19 %

EBITDA Margin (%) 12 % 12 % 12 % 13 %

Net Margin (%) 6 % 6 % 6 % 7 %

Minda Industries Absolute – ADD Relative – Benchmark 5% ATR in 14 Months


Exhibit 1: Status of consolidation program

S.no Company Effective Date Consideration Revenue

FY16 FY17 FY18 FY19 FY18

1 ASEAN (51%) Jul-15 260

2,060

2 MJCL (50%) Aug-15 140

2,740

3 Kosei Minda (30%) Mar-16 120

2,160

4 Minda TG (51%) Mar-16 190

520

5 Roki Minda (49%) Oct-16

430

3,420

6 ASEAN (49%) Apr-17

290

-

7 MI Torica (60%) Apr-18

80

2,530

8 MRPL (24%) Jan-18

950

7,280

9 D 10 Minda (50%) Jan-18

260

3,430

10 TG Minda (48%) Jul-18

200 1,370 4,810

Total

710 430 1,780 1,370 28,950

Source: Company, Equirus Securities

Exhibit 2: Segment-wise sales and EBITDA contribution 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18

Sales

Switches 2,884 3,253 2,859 3,148 3,052 3,460 3,147 5,648

Yoy growth 6% 6% 10% 79%

Lighting 1,668 2,514 2,180 2,466 2,608 3,031 2,735 3,126

Yoy growth 56% 21% 25% 27%

Acoustics 1,502 1,577 1,333 1,740 1,568 1,680 1,743 1,892

Yoy growth 4% 7% 31% 9%

Others 1,495 1,676 2,012 1,614 2,220 2,812 2,936 3,043

Yoy growth 49% 68% 46% 89%

EBITDA

Switches 268 336 302 286 322 384 388 783

Yoy growth 20% 14% 29% 173%

Lighting 151 216 271 247 203 264 259 337

Yoy growth 34% 22% -5% 37%

Acoustics 151 177 130 193 128 134 159 183

Yoy growth -15% -24% 22% -5%

Others 180 202 291 323 356 585 459 392

Yoy growth 97% 189% 58% 21%

EBITDA margins

Switches 9% 10% 11% 9% 11% 11% 12% 14%

Lighting 9% 9% 12% 10% 8% 9% 9% 11%

Acoustics 10% 11% 10% 11% 8% 8% 9% 10%

Others 12% 12% 14% 20% 16% 21% 16% 13%

Source: Company, Equirus Securities

Minda Industries Absolute – ADD Relative – Overweight 10% ATR in 14 Months


Earning call takeaways

Industry performance

Auto industry registered significant improvement in FY18 owing to a good monsoon,

improved rural sentiments, a waning GST impact and higher BS-IV vehicle production.

Management expects 6-8% yoy volume growth for the next five years.

MNDA expects to top industry growth by increasing the kit value with all OEMs.

Financial performance

Management has recommended a 2:1 bonus share issue for which shareholder

approval will be sought shortly.

Revenues grew 53% yoy to Rs 13.7bn (4QFY17: Rs 8.96bn) driven by strong

performance from Mindarika, MJCL and Minda Kosei.

Standalone revenues grew 26% yoy to Rs 5.04bn led by lamp & 2W switch businesses.

Consolidated EBITDA margins expanded 67bps yoy to 12.4% driven by lower RM costs,

improved capacity utilization and ramp-up of new capacities.

EBITDA margins for the standalone business expanded 222bps to 11.5% led by higher

capacity utilization in lamp and switch business. FY19 margins to be only marginally

ahead of FY18, but FY20 could see improvement due to improvement in lighting

margins.

The domestic market constituted 82% of the topline and exports 18%.

Segment performance

Switching systems contributed Rs 15.80bn in FY18 or ~35% of total consolidated

revenue. Overall, segment EBIDTA margins stood at ~12% during the year.

Lighting business contributed Rs 11.64bn in FY18 or ~25% to overall revenues with

~9.9% EBITDA margins.

The acoustic division contributed Rs 7.17bn in FY18 or ~16% of total revenues with

margins of ~8 %.

Other products like alloy wheels, aluminum die casting and blow molding hoses

contributed about Rs 11bn to the consolidated topline with overall margins of ~15.8%.

Consolidation update

TG Minda (FY18 revenues: Rs 4.8bn) will become a JV company by from 1 Jul’18.

MRPL became a 51% subsidiary of MNDA from 1 Jan’18. The company paid Rs 0.95bn

for the transaction. Tokai Rika is the JV partner.

MRPL is a leader in 4W switching systems with a market share of 52%.

Denso Ten Minda (49%) and Minda D Ten (51%) are being consolidated in the group

from 1 Jan’18.

Battery business has been hived off from the standalone business to MSBL.

MNDA will hive off its 2W lighting business to Rinder India (a 100% subsidiary) at book

value in FY18-FY19.

MI Torica would be consolidated with effect from Apr’18-19.

Tokai Rika Minda would be consolidated to the financials by year-end.

Other highlights

MRPL (switches) and Minda Kosei (alloy wheels) plants have started production from

Gujarat plants last week. MNDA has made investments of ~Rs 0.59bn in switches and

Rs 2bn in alloy wheels.

The Onkyo plant started production of speakers in Sep’17 at a ~Rs 0.5bn investment.

The TTE plant for RPAS is expected to start production by FY19-end, in which the

company would invest ~Rs 0.4bn.

MNDA is in the process of acquiring additional stake in TG Minda, raising its stake to

48%, and the transaction is expected to be completed by June-end.

For FY19, MNDA expects capex of Rs 3.5bn-4bn, including consolidation.

Revenue from alloy wheels is expected at ~Rs 6.5bn in FY19.

Rinder sales for FY18 stood at ~Rs 4.26bn against Rs 3.86bn for FY17.

In airbags, MNDA has a market share of ~26%.

From FY20, regulations on RPAS and airbags will come into force. Maruti is expected

to be the biggest adopter after the regulation of airbags; thus, MNDA’s market share

in airbags is expected to increase.

Margins were lower in the lighting business on below-expected Rinder revenues.

MJCL growth was largely led by increasing Al prices on LME and higher contribution

of Wabco to the customer mix.

New products and new collaboration will drive margin expansion.

Rinder 4Q sales stood at ~Rs 1.1bn. Lighting margins are lower than rest of the

business, and should go up in FY20.

For the RPAS business, Minda is targeting 70% SOB in a new MSIL model.



Quarterly performance, standalone

Rs mn 4QFY18 4QFY18E 3QFY18 4QFY17 % Change

Comments 4QFY18E 3QFY18 4QFY17

Net Sales 5,046 4,692 4,518 3,996 8% 12% 26%

Cost of raw material 3,141 2,947 2,842 2,538 7% 11% 24%

Employee Cost 677 657 644 567 3% 5% 19%

Other Expenditure 648 596 547 521 9% 19% 25%

Total Expenditures 4,466 4,200 4,033 3,626 6% 11% 23%

EBITDA 580 493 485 371 18% 20% 57%

Depreciation 140 134 135 131 4% 4% 7%

EBIT 440 358 350 240 23% 26% 83%

Interest 25 7 15 23 253% 62% 6%

Other Income 56 46 97 10 22% -42% 450%

PBT 471 397 432 227 19% 9% 108%

Tax 109 95 100 25 14% 9% 333%

Recurring PAT 363 302 333 202 20% 9% 80%

Extraordinaries 0 0 0 0

Reported PAT 363 302 333 202 20% 9% 80%

EPS (Rs) 4.2 3.5 3.8 2.3 20% 9% 80%

EBITDA Margin 11.5% 9.5% 10.7% 9.3% 195 bps 76 bps 222 bps

EBIT Margin 8.7% 5.8% 7.7% 6.0% 295 bps 97 bps 271 bps

PBT Margin 9.3% 5.9% 9.6% 5.7% 346 bps -22 bps 366 bps

PAT Margin 7.2% 4.5% 7.4% 5.1% 271 bps -18 bps 213 bps

Tax Rate 23.1% 24.0% 23.1% 11.1% -91 bps 3 bps 1203 bps

Raw Material 62.2% 62.8% 62.9% 63.5% -56 bps -66 bps -126 bps

Employee cost 13.4% 14.0% 14.3% 14.2% -58 bps -84 bps -78 bps

Other expenses 12.8% 12.7% 12.1% 13.0% 15 bps 75 bps -18 bps



Quarterly performance, consolidated

Rs mn 4QFY18 4QFY18E 3QFY18 4QFY17 % Change

Comments 4QFY18E 3QFY18 4QFY17

Net Sales 13,709 10,874 10,562 8,968 26% 30% 53%

Raw materials consumed 8,453 6,513 6,473 5,557 30% 31% 52%

Employee Cost 1,765 1,683 1,414 1,187 5% 25% 49%

Other Expenditure 1,796 1,377 1,411 1,175 30% 27% 53%

Total Expenditures 12,014 9,573 9,298 7,919 26% 29% 52%

EBITDA 1,695 1,302 1,264 1,049 30% 34% 62%

Depreciation 489 414 420 360 18% 16% 36%

EBIT 1,206 887 844 689 36% 43% 75%

Interest 139 66 70 78 112% 98% 79%

Other Income 124 86 77 32 43% 61% 287%

PBT 1,574 908 851 643 73% 85% 145%

Tax 225 249 243 118 -10% -7% 90%

PAT before MI & Associates 1,349 659 608 525 105% 122% 157%

Minority Interest 0 -61 0 0 -100% NA NA

Profit from Assoc. 51 117 53 104 -56% -4% -51%

Recurring PAT 1,400 715 661 629 96% 112% 122%

Extraordinaries 63 0 28 62

Reported PAT 1,463 715 633 567 104% 131% 158%

EPS (Rs) 16.9 8.3 7.6 7.3 104% 121% 133%

EBITDA Margin 12.4% 12.0% 12.0% 11.7% 39 bps 40 bps 67 bps

EBIT Margin 8.8% 8.2% 8.0% 7.7% 64 bps 81 bps 112 bps

PBT Margin 11.5% 8.3% 8.1% 7.2% 313 bps 342 bps 431 bps

PAT Margin 10.7% 6.6% 6.0% 6.3% 409 bps 468 bps 434 bps

Tax Rate 14.3% 27.4% 28.6% 18.4% -1313 bps -1425 bps -410 bps

Raw Material 61.7% 59.9% 61.3% 62.0% 177 bps 38 bps -31 bps

Employee cost 12.9% 15.5% 13.4% 13.2% -261 bps -52 bps -36 bps

Other expenses 13.1% 12.7% 13.4% 13.1% 44 bps -26 bps 0 bps



Company Snapshot

How we differ from Consensus

- Equirus Consensus % Diff Comment

EPS FY19E 39.8 37.1 7 % We expect consensus estimates to

change in post 4Q notes FY20E 48.0 43.3 11 %

Sales FY19E 58,131 55,270 5 %

FY20E 65,746 63,621 3 %

PAT FY19E 3,441 3,236 6 %

FY20E 4,150 3,824 9 %

Key Investment arguments:

MNDA’s dominance expected to continue in switch segment on the account of strong

in-house R &D.

Using Indian low-cost base & high technology products range, MNDA to strengthen its

leadership position in acoustics with a 13% CAGR over FY17-FY19E.

Lighting division sales to grow at a 15% CAGR over FY17-19E through ramping up

utilization levels led by a revival in the 4W industry.

Key Estimates:

Sales (Rs. mn) FY18 FY19E FY20E FY21E Switches 10,803 11,783 12,857 14,034

yoy growth (%) 9% 9% 9% 9%

Lighting 5,983 6,817 7,770 8,861

yoy growth (%) 16% 14% 14% 14%

Horns 3,143 3,552 4,019 4,553

yoy growth (%) 12% 13% 13% 13%

Key Risk:

Margin pressure due to rising commodity prices

Key Triggers

New JVs

Better capacity utilization across segments

Sensitivity to Key Variables % Change % Impact on EPS

EBITDA Margins -1 % -11 %

- - -

- - -

DCF Valuations & Assumptions

Rf Beta Ke Term. Growth Debt/IC in Term. Yr

7.7 % 0.9 13.1 % 4.0 % 40.0 %

- FY19E FY20E FY21-23E FY24-28E FY29-33E

Sales Growth 30 % 13 % 14 % 14 % 12 %

NOPAT Margin 6 % 6 % 7 % 7 % 7 %

IC Turnover 2.37 2.53 3.01 3.20 3.20

RoIC 16.4 % 16.7 % 20.4 % 22.5 % 22.3 %

Years of strong growth 1 2 5 10 15

Valuation as on date (Rs) 330 348 526 655 756

Valuation as on Sep’18 390 412 622 774 894

Based on DCF, assuming 25 years of 12% CAGR growth and 20% average ROIC, we derive

30th Sep’19 fair value of Rs. 1,118.

Company Description:

Minda Industries Ltd is the flagship company of the Uno Minda Group. From just one

product in 1958 to more than 20 products in 2017, MNDA has emerged as one of the

leading suppliers of proprietary automotive solutions to OEMs over more than six

decades. MNDA had consolidated sales of Rs 35bn in FY17. The company has 12 direct

subsidiaries and 7 step-down subsidiaries, 3 joint venture companies and 5 associate

entities with headquarters in Manesar, Gurgaon (Haryana), India.

Comparable valuation Mkt Cap

Rs. Mn.

Price

Target

Target

Date

EPS P/E BPS P/B RoE Div Yield

Company Reco. CMP FY18A FY19E FY20E FY18A FY19E FY20E FY18A FY19E FY18A FY19E FY20E FY18A FY19E

Minda Industries ADD 1,284 111,747 1,449 30th Sep'19 31.5 39.8 48.0 40.8 32.2 26.7 161.0 6.7 22 % 23 % 23 % 0.2 % 0.3 %

Gabriel Ind NR 151 21,676 NR NR - 8.0 9.4 - 19.0 16.1 - 11.8 0 % 16 % 0 % 0.6 % -

Suprajit Engg. NR 289 40,402 NR NR 7.8 9.3 11.6 37.2 31.0 24.8 75.2 36.3 36 % 37 % 34 % 0.2 % 0.2 %



Standalone Quarterly Earnings Forecast and Key Drivers

Rs in Mn 1Q18A 2Q18A 3Q18A 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E 1Q20E 2Q20E 3Q20E 4Q20E FY18A FY19E FY20E FY21E

Revenue 4,226 4,777 4,518 5,046 4,757 5,376 5,085 5,680 5,341 6,037 5,710 6,158 18,571 20,898 23,245 26,162

EBITDA 344 498 485 580 499 565 534 596 577 652 617 665 1,911 2,194 2,511 2,825

Depreciation 119 131 135 140 141 144 148 150 153 156 158 161 525 583 628 670

EBIT 225 367 350 440 359 420 386 446 424 496 458 504 1,385 1,611 1,883 2,156

Interest 17 11 15 25 20 20 20 20 20 20 20 20 68 80 80 80

Other Income 52 182 97 56 42 46 49 44 44 50 54 58 384 181 205 263

PBT 260 538 432 471 381 446 415 470 448 526 492 542 1,701 1,712 2,007 2,338

Tax 77 113 100 109 107 125 116 132 125 147 138 152 398 479 562 655

Recurring PAT 183 426 333 363 274 321 299 339 322 379 354 390 1,303 1,233 1,445 1,683

Extraordinary -55 7 0 0 0 0 0 0 0 0 0 0 -61 0 0 0

Reported PAT 238 419 333 363 274 321 299 339 322 379 354 390 1,364 1,233 1,445 1,683

EPS (Rs) 2.12 4.92 3.85 4.19 3.17 3.72 3.45 3.92 3.73 4.38 4.10 4.52 15.08 14.26 16.72 19.48

Key Drivers

- - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - -

Sequential Growth (%)

Revenue 6 % 13 % -5 % 12 % -6 % 13 % -5 % 12 % -6 % 13 % -5 % 8 % - - - -

EBITDA -7 % 45 % -2 % 20 % -14 % 13 % -5 % 12 % -3 % 13 % -5 % 8 % - - - -

EBIT -6 % 63 % -5 % 26 % -18 % 17 % -8 % 15 % -5 % 17 % -8 % 10 % - - - -

Recurring PAT -9 % 132 % -22 % 9 % -24 % 17 % -7 % 13 % -5 % 17 % -6 % 10 % - - - -

EPS -9 % 132 % -22 % 9 % -24 % 17 % -7 % 13 % -5 % 17 % -6 % 10 % - - - -

Yearly Growth (%)

Revenue 6 % 9 % 13 % 26 % 13 % 13 % 13 % 13 % 12 % 12 % 12 % 8 % 13 % 13 % 11 % 13 %

EBITDA -13 % 21 % 36 % 57 % 45 % 13 % 10 % 3 % 15 % 15 % 15 % 12 % 22 % 15 % 14 % 13 %

EBIT -20 % 25 % 55 % 83 % 59 % 15 % 10 % 1 % 18 % 18 % 19 % 13 % 28 % 16 % 17 % 14 %

Recurring PAT -18 % 29 % 75 % 80 % 50 % -24 % -10 % -7 % 18 % 18 % 19 % 15 % 37 % -5 % 17 % 16 %

EPS -18 % 29 % 75 % 80 % 50 % -24 % -10 % -7 % 18 % 18 % 19 % 15 % 37 % -5 % 17 % 16 %

Margin (%)

EBITDA 8 % 10 % 11 % 11 % 11 % 11 % 11 % 11 % 11 % 11 % 11 % 11 % 10 % 11 % 11 % 11 %

EBIT 5 % 8 % 8 % 9 % 8 % 8 % 8 % 8 % 8 % 8 % 8 % 8 % 7 % 8 % 8 % 8 %

PBT 6 % 11 % 10 % 9 % 8 % 8 % 8 % 8 % 8 % 9 % 9 % 9 % 9 % 8 % 9 % 9 %

PAT 4 % 9 % 7 % 7 % 6 % 6 % 6 % 6 % 6 % 6 % 6 % 6 % 7 % 6 % 6 % 6 %



Consolidated Financials

P&L (Rs Mn) FY18A FY19E FY20E FY21E

Balance Sheet (Rs Mn) FY18A FY19E FY20E FY21E

Cash Flow (Rs Mn) FY18A FY19E FY20E FY21E

Revenue 44,706 58,131 65,746 75,015 Equity Capital 173 173 173 173 PBT 3,672 5,026 5,855 7,107

Op. Expenditure 39,367 50,952 57,543 65,568 Reserve 13,743 16,263 19,375 23,108 Depreciation 1,649 2,009 2,341 2,563

EBITDA 5,338 7,179 8,203 9,446 Networth 13,916 16,435 19,547 23,281 Others 0 0 0 0

Depreciation 1,649 2,009 2,341 2,563 Long Term Debt 5,429 5,429 3,929 2,429 Taxes Paid 977 1,407 1,639 1,990

EBIT 3,690 5,170 5,862 6,883 Def Tax Liability 1,554 1,552 1,552 1,552 Change in WC -622 -1,030 -519 -680

Interest Expense 351 497 407 272 Minority Interest 2,110 2,633 3,168 3,821 Operating C/F 3,722 4,597 6,037 7,000

Other Income 334 353 400 495 Account Payables 7,984 10,401 11,663 13,389 Capex -5,816 -4,244 -3,070 -3,131

PBT 3,672 5,026 5,855 7,107 Other Curr Liabi 2,659 3,570 4,028 4,626 Change in Invest 0 0 0 0

Tax 977 1,407 1,639 1,990 Total Liabilities & Equity 33,651 40,020 43,888 49,098 Others 0 0 0 0

PAT bef. MI & Assoc. 2,695 3,619 4,215 5,117 Net Fixed Assets 12,387 14,278 14,537 14,574 Investing C/F -5,816 -4,244 -3,070 -3,131

Minority Interest 207 523 535 653 Capital WIP 2,108 2,108 2,108 2,108 Change in Debt 105 0 -1,500 -1,500

Profit from Assoc. 231 344 470 531 Others 3,885 4,229 4,700 5,231 Change in Equity 0 -523 -535 -653

Recurring PAT 2,720 3,441 4,150 4,995

Inventory 4,175 5,616 6,339 7,280 Others -293 -55 -33 -77

Extraordinaires -430 0 0 0 Account Receivables 7,897 10,246 11,479 13,176 Financing C/F -188 -578 -2,068 -2,230

Reported PAT 3,150 3,441 4,150 4,995 Other Current Assets 1,604 2,173 2,456 2,821 Net change in cash -2,283 -225 899 1,639

FDEPS (Rs) 31.5 39.8 48.0 57.8 Cash 1,595 1,370 2,269 3,908 RoE (%) 22 % 23 % 23 % 23 %

DPS (Rs) 2.8 3.8 4.8 5.8 Total Assets 33,651 40,020 43,888 49,098

RoIC (%) 15 % 15 % 16 % 18 %

CEPS (Rs) 50.5 63.1 75.1 87.5 Non-cash Working Capital 3,033 4,063 4,583 5,263

Core RoIC (%) 15 % 16 % 17 % 19 %

FCFPS (Rs) -21.3 8.2 37.7 47.0 Cash Conv Cycle 24.8 25.5 25.4 25.6 Div Payout (%) 9 % 12 % 12 % 12 %

BVPS (Rs) 161.0 190.2 226.2 269.4 WC Turnover 14.7 14.3 14.3 14.3 P/E 40.8 32.2 26.7 22.2

EBITDAM (%) 12 % 12 % 12 % 13 % FA Turnover 3.1 3.5 3.9 4.5 P/B 8.0 6.7 5.7 4.8

PATM (%) 6 % 6 % 6 % 7 % Net D/E 0.3 0.2 0.1 -0.1 P/FCFF -60.4 156.1 34.0 27.3

Tax Rate (%) 27 % 28 % 28 % 28 % Revenue/Capital Employed 2.2 2.4 2.4 2.5 EV/EBITDA 21.9 16.3 14.0 11.8

Sales Growth (%) 28 % 30 % 13 % 14 %

Capital Employed/Equity 1.2 1.3 1.4 1.3

EV/Sales 2.6 2.0 1.7 1.5

FDEPS Growth (%) 62 % 27 % 21 % 20 %

Dividend Yield (%) 0.2 % 0.3 % 0.4 % 0.0 %

TTM P/E vs. 2 yr forward EPS growth TTM P/B vs. 2 yr forward RoE



Historical Consolidated Financials

P&L (Rs Mn) FY15A FY16A FY17A FY18A

Balance Sheet (Rs Mn) FY15A FY16A FY17A FY18A

Cash Flow (Rs Mn) FY15A FY16A FY17A FY18A

Revenue 22,266 25,273 35,050 44,706 Equity Capital 159 159 173 173 PBT 688 1,335 2,225 3,672

Op. Expenditure 20,723 22,895 31,214 39,367 Reserve 3,494 4,558 10,101 13,743 Depreciation 835 926 1,357 1,649

EBITDA 1,543 2,378 3,836 5,338 Networth 3,653 4,717 10,273 13,916 Others 104 277 310 0

Depreciation 835 926 1,357 1,649 Long Term Debt 2,088 3,927 5,324 5,429 Taxes Paid 168 253 508 977

EBIT 708 1,452 2,479 3,690 Def Tax Liability 294 427 768 1,554 Change in WC -104 -822 177 -622

Interest Expense 250 257 393 351 Minority Interest 213 1,096 1,390 2,110 Operating C/F 1,354 1,463 3,561 3,722

Other Income 229 140 139 334 Account Payables 2,670 3,215 5,151 7,984 Capex -646 -3,425 -4,657 -5,816

PBT 688 1,335 2,225 3,672 Other Curr Liabi 1,049 1,487 1,206 2,659 Change in Invest 195 -2,133 -2,837 0

Tax 194 277 489 977 Total Liabilities & Equity 9,966 14,868 24,111 33,651 Others 59 2,989 3,774 0

PAT bef. MI & Assoc. 494 1,058 1,736 2,695 Net Fixed Assets 3,987 5,664 8,955 12,387 Investing C/F -391 -2,569 -3,720 -5,816

Minority Interest -3 115 200 207 Capital WIP 219 1,301 1,373 2,108 Change in Debt -674 1,602 372 105

Profit from Assoc. 24 117 145 231 Others 570 903 1,250 3,885 Change in Equity 53 0 2,965 0

Recurring PAT 520 1,059 1,681 2,720 Inventory 1,406 1,838 2,513 4,175 Others -362 -368 -669 -293

Extraordinaires -160 -52 0 -430 Account Receivables 2,895 3,639 5,235 7,897 Financing C/F -984 1,234 2,669 -188

Reported PAT 680 1,111 1,681 3,150 Other Current Assets 589 957 1,020 1,604 Net change in cash -21 127 2,510 -2,283

EPS (Rs) 6.0 12.3 19.4 31.5 Cash 301 567 3,766 1,595

RoE (%) 15 % 25 % 22 % 22 %

DPS (Rs) 1.2 1.4 2.2 2.8

Total Assets 9,966 14,869 24,111 33,651

RoIC (%) 11 % 15 % 14 % 15 %

CEPS (Rs) 17.1 25.0 38.3 50.5 Non-cash Working Capital 1,171 1,732 2,411 3,033 Core RoIC (%) 9 % 15 % 16 % 15 %

FCFPS (Rs) 14.4 -11.4 1.9 -21.3 Cash Conv Cycle 19.2 25.0 25.1 24.8 Div Payout (%) 82 % 73 % 14 % 9 %

BVPS (Rs) 46.0 59.5 118.9 161.0 WC Turnover 19.0 14.6 14.5 14.7

P/E 213.3 104.7 66.0 0.0

EBITDAM (%) 7 % 9 % 11 % 12 % FA Turnover 5.3 3.6 3.4 3.1 P/B 27.9 21.6 10.8 0.0

PATM (%) 2 % 4 % 5 % 6 % Net D/E 0.5 0.7 0.2 0.3 P/FCFF 89.1 -112.7 687.0 -60.4

Tax Rate (%) 28 % 21 % 22 % 27 % Revenue/Capital Employed 3.6 3.1 2.5 2.2 EV/EBITDA 73.9 48.8 29.9 0.0

Sales growth (%) 31 % 14 % 39 % 28 %

Capital Employed/Equity 1.7 1.5 1.1 1.2

EV/Sales 5.1 4.6 3.3 0.0

FDEPS growth (%) 625 % 104 % 59 % 62 %

Dividend Yield (%) 0.1 % 0.1 % 0.2 % 0.2 %



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Research Analysts Sector/Industry Email

Equity Sales E-mail

Abhishek Shindadkar IT Services [email protected] 91-22-43320643 Vishad Turakhia [email protected] 91-22-43320633

Ashutosh Tiwari Auto, Metals & Mining [email protected] 91-79-61909517 Subham Sinha [email protected] 91-22-43320631

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Vikas Jain [email protected] 91-79-61909531

Rating & Coverage Definitions: Absolute Rating • LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap >Rs 5 billion and ATR >= 20% for rest of the companies • ADD: ATR >= 5% but less than Ke over investment horizon • REDUCE: ATR >= negative 10% but <5% over investment horizon • SHORT: ATR < negative 10% over investment horizon Relative Rating • OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon • BENCHMARK: likely to perform in line with the benchmark • UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon Investment Horizon Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of a calendar quarter. Lite vs. Regular Coverage vs. Spot Coverage We aim to keep our rating and estimates updated at least once a quarter for Regular Coverage stocks. Generally, we would have access to the company and we would maintain detailed financial model for Regular coverage companies. We intend to publish updates on Lite coverage stocks only an opportunistic basis and subject to our ability to contact the management. Our rating and estimates for Lite coverage stocks may not be current. Spot coverage is meant for one-off coverage of a specific company and in such cases, earnings forecast and target price are optional. Spot coverage is meant to stimulate discussion rather than provide a research opinion.

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Documents

Minda Industries Absolute : ADD Relative: …...Minda Industries Absolute – ADD Relative – Overweight 10% ATR in 14 Months May 24, 2018 Analyst: Ashutosh Tiwari [email protected]