Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 India Equity Institutional Research Automobiles RESULT UPDATE Minda Industries Ltd. INR 886 Profit boosted by margins ACCUMULATE In Q3FY16, Minda Industries Ltd (MIL) reported net sales of INR 6,257mn which is line of our estimates of INR 6189mn, increased by 12.7% y-o-y and decreased by 4.0% q-o-q. EBIDTA stood at INR 589 Mn(our estimates of INR 564mn) and EBIDTA margins of 9.4 % respectively. In Q3FY16, growth in EBITDA is about 45.2% y-o-y and de-growth of 6.8% q-o-q. Adjusted PAT stood at INR 292Mn which is higher than our estimates of INR 271mn. PAT saw a growth of 123.4% y-o-y and 10.5% q-o-q for Q3FY16 respectively. Revenue Growth with Expansion in progress: Minda industries reported net sales of INR 6257Mn which is increased by 12.7% Y-o-Y and decreased by 4.0% Q-o-Q. During 9MFY16, the revenue stood at INR 18100 Mn with the growth of 16% y-o-y. We believe the revenue growth was due to better capacity utilization, new orders received from its customers and also addition of new products in its business segments. Going forward its revenue expansion will continue as it has started operation at the Clarton s new facility at Mexico, orders received from Jaguar/ Land rover model for its lighting division. Minda Industries has also started supply its product to its customer KTM, Austria which will help in gaining revenue for FY16. Margin surprise boosted profitability: MIL reported EBIDTA of 589 Mn with growth of 45.2% y-o-y and de-growth of 6.8% q-o-q. EBIDTA margin remained at 9.4% with increase of 211bps y-o-y and decrease of 28bps q-o-q. Higher profitability was due to increase in stock and lower price of raw material but on the other side there was also expense incurred for employee cost around 34.3% y-o-y and 9.1% q- o-q due to bonus provision made for FY16. Reported PAT stood at INR 289Mn, up by 123.5 y-o-y and 10.5% Q-o-Q. PAT margins was at 5.0% and increase to 275bps y- o-y and 92bps q-o-q. PAT saw an increase due to higher other income during Q3FY16 of around 118.3% y-o-y and 65.4% q-o-o to INR 76Mn and depreciation of INR 217 Mn remained lower as compared to q-o-q by 11.7%. Target Price (TP): INR 985 Potential Upside : 11.17% Market Data Shares outs (Mn) 15.87 EquityCap (INR Mn) 158.7 Mkt Cap (INR Mn) 13152.4 52 Wk H/L (INR) 996/475 Volume Avg (3m K) 46.57 Face Value (INR) 10 Bloomberg Code MNDA IN Market Info: SENSEX 24223 NIFTY 7455 Price Performance 160 120 Increasing Market Penetration through Acquisition: The Company s broader range of products and innovation has helped the company in acquiring more customers in both domestic and international markets. Company s recent acquisition of global companies has also resulted in gaining access to international clients thereby expanding its market share. Minda Industries is the market leader in the switch segment. Clarton Horn's new facility (CKD based) in Mexico, is now operational and commercial production will start from April 2016. Clarton Horn's supplies to premium car makers like Mercedes, BMW, Porsche and Bentley. Through this acquisition, the company gets access to these luxury OEMs to supply its other products. Also, from November 2015, MJCL its (subsidiary) has started supplying to WABCO which helps to increase revenue and market share of MIL. Valuation & Views: MIL has market leader in switch gear segment. We believe MIL has potential for growth because of its better capacity utilization, tie up with global brands, innovative portfolio and large order inflow. The stock is currently trading 10.8x its FY 18E EPS of INR 82.1 respectively. We are valuing company 12x its FY18e EPS of INR 82.1 and arrived at a target price of INR 985 and recommend accumulate rating on the stock with a potential upside of 11.17% from current levels. Key Financials: Particulars (INR Mn) FY11 FY12 FY13 FY14 FY15 Net Sales 9542 11792 13404 17061 22266 EBITDA 837 759 935 595 1514 PAT 355 289 282 71 681 OPM (%) 10% 7% 7% 5% 8% NPM (%) 3% 2% 2% 0.3% 3% EPS 26 18 18 5 43 PE (x) 20 30 30 117 12 80 Share holding Pattern (%) Particulars Dec15 Sep15 Jun15 Promoters 70.9 70.9 70.9 FIIs 0.04 0.04 0.03 DIIs 2.82 2.82 2.84 Others 26.24 26.24 26.23 Total 100 100 100 Source: BSE Sensex Name of Analyst: Analyst : Abhishek Jain abhishek.jain@krchoksey.com 91-22-6696 5502 www.krchoksey.com 91-22-6696 5555 91-22-6691 9569 Minda Ind. KRChoksey - Institutional Research is also available on Bloomberg KRCS<GO>, Thomsonreuters, Factset and Capital IQ February 04, 2016
Q3FY16 Result Snapshot: (INR Mn) Particulars Q3FY16 Q2FY16 Q3FY15 Q-o-Q Y-o-Y Net Sales 6229 6450 5503-3.4% 13.2% Other operating income 28 67 50-58.3% -44.0% Net Sales & Other Operating Income 6257 6517 5553-4.0% 12.7% Total Expenditure 5668 5885 5147-3.7% 10.1% (Increase) / Decrease In Stocks -435-353 -261 23.0% 66.6% Purchase of Finished Goods 870 804 867 8.2% 0.3% Cost of Raw Materials 3465 3750 3064-7.6% 13.1% Operating & Manufacturing Expenses 882 873 816 1.0% 8.1% Employee Cost 886 812 660 9.1% 34.3% Selling & Distribution Expenses 0 0 0.0 0 0 PBIDT (Excl OI) 589 632 406-6.8% 45.2% EBITDA Margins (%) 9.4% 9.7% 7.3% -28bps 211bps Depreciation 217 245 206-11.7% 5.2% EBIT & exceptional Item 373 387 200-3.7% 93.3% Exceptional Items 26 0 0 0 0 Other Income 76 46 35 65.4% 118.3% EBIT 475 433 235 9.7% 102.1% Interest 71 82 63-13.7% 13.0% EBT 404 351 172 15.2% 134.4% Tax 90 83 46 7.9% 95.6% PAT 314 268 126 17.5% 148.6% PAT Margin (%) 5.0% 4.1% 2.3% 92bps 275bps Share of Profit/(Loss) of associate 4 13 6-68.9% -27.1% Minority Interest -30-20 -3 50.8% 895.0% Profit/Loss after tax, Minority Interest & others 289 261 129 10.5% 123.4% EPS 18.2 16.4 8.2 10.7% 122.3% Key Concall Highlights: Improvements in next year - To achieved 20% EBITDA margin, Better operational efficiency & capacity utilization & consolidation MIL lighting division received new orders for Jaguar/Land rover model in India. Clarton Horn's new facility (CKD based) in Mexico, is now operational and commercial production will start from April 2016. 7cr bonus liability provision is made for 2015-16 Working to improve margin q-o-q & y-o-y with the help of better capacity utilization and internal operational efficiency. Margin will improve in 2016-17. New plant which is alloy wheel plant which become functional in April 2016. 2 KRChoksey - Institutional Research
Profit & Loss Statement (INR Mn) Revenues 9542 11792 13404 17061 22266 Op. Expenses 8705 11033 12469 16466 20753 EBITDA 837 759 935 595 1514 Other Income 146 163 110 352 259 Depreciation 339 402 463 591 835 EBIT 644 520 582 356 938 Interest 167 198 191 242 250 PBT 477 322 391 114 688 Tax 122 0 110 76 194 Exceptional Items 0-77 2 15 160 PAT 355 245 283 53 654 Minority 0 44-1 18 27 Adj Pat 355 289 282 71 681 Balance Sheet (INR Mn) Equity Share Capital 565 194 194 194 194 Reserves & Surplus 1422 2668 2895 2928 3459 Total Shareholders Fund 1987 2862 3089 3122 3653 Minority Interest 115 123 138 213 Non- current liabilities 732 1113 1521 2051 1707 Long term Borrowings 552 661 887 1377 972 Deferred tax liabilities 103 6-14 -16-2 Other LT liabilities & prov 77 446 648 690 737 Current Liabilities 2877 3488 3835 5043 5136 Short-term borrowings 950 938 808 1402 1116 Trade payables 1253 1773 2164 2473 2670 Other cur liabilities & Prov 674 777 863 1168 1350 Total Liabilities 5596 7578 8568 10354 10709 Assets Non- current Assets 2910 3528 4491 5194 5216 Fixed assets 2573 2797 3608 4224 4205 Non-current investments 189 217 218 244 263 Long-term loans & adv 133 499 634 663 694 Other non-current assets 15 15 31 63 54 Current assets 2685 4049 4075 5161 5491 Current investments 11 230 20 Trade receivables 1308 1963 2173 2610 2895 Inventories 838 808 895 1247 1406 Cash & bank balances 229 666 385 278 280 Short-term loans & adv 287 557 562 690 806 Other current assets 23 44 60 106 84 Total Assets 5596 7578 8568 10354 10709 3 KRChoksey - Institutional Research
Cash Flow Statement (INR Mn) PBT 340 334 385 337 697 Adjustment 458 428 491 487 542 CF before W.cap 798 762 876 824 1239 Inc/dec in W.cap -333 136 68-150 2 Op CF after W.cap 465 898 944 674 1241 Less Taxes -29-73 -96-72 -134 Net CF From Operations 436 825 848 602 1107 CF from Invst Activities -325-194 -692-629 -490 CF from Fin Activities -16-379 -315-192 -577 Net inc /(dec) in cash 95 252-159 -219 40 Op. bal of cash 132 227 479 321 102 Cl. balance of cash 227 479 320 102 142 Ratios Earnings Per Share (INR) 26 18 18 5 43 EBITDA (%) 10 7 7 5 8 PAT (%) 3 2 2 0 3 ROE (%) 29 11 10 2 20 ROCE (%) 20 11 12 7 18 Receivable days 39 47 52 48 42 Inventory Days 24 24 21 21 20 Payable days 51 51 58 53 46 Net Sales Growth (%) 53 24 14 27 31 EBITDA Growth (%) 34-6 13-9 87 PAT Growth (%) 52-32 17-81 1125 BVPS 120 178 192 195 228 PE (x) 20 30 30 117 12 EV/EBITDA(x) 14 15 12 21 8 4 KRChoksey - Institutional Research
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