Can Minda Corporation Sustain its Multibagger Status After a 104% Rally in 1 Year? Trade Brains Trade Brains

As you can see, the Indian auto sector has become a crucial indicator of both the nation’s technological and economic progress. India has emerged as a global leader in the heavy vehicle manufacturing sector, accounting for the top four positions in the passenger car market, second in bus manufacturing, third in heavy truck manufacturing, and first in two-wheeler and tractor manufacture.

The environment we live in is always “changing.” The Indian automotive industry is undergoing rapid transformation, with notable developments including the move to linked cars, on-demand mobility, increased uptake of electric vehicles, and increased technical content in automobiles.

Even if these modifications have the ability to disrupt the market, they also present a route towards genuine change, providing Minda Corporation, a producer of automotive components, with the chance to remain at the forefront of the sector.

The stock has been nothing but a multibagger giving a return of 104 percent over a period of one year. Even when looking at a period of three years, the stock has surged a whopping 318 percent. But can Minda Corporation grow further given its stellar past performance? For that let’s understand what the business does and what their future looks like.

Corporate Overview Of Minda Corporation

Minda Corporation is a prominent automobile component manufacturer based in India with a broad global reach. Established in 1985, the Company serves as the flagship enterprise of Spark Minda, a former member of the Minda Group.

It has 34 plants, as well as offices abroad and in India. Minda Corporation has positioned itself in several key places to stay in close proximity to its customers and provide superior customer service.

Mechatronics, Information and Connected Systems, Plastics and Interiors, Aftermarket, Electronics Manufacturing Excellence, and Spark Minda Green Mobility are just a few of the products that the company offers. 

Comprising over 16,000 workers, Minda Corporation is a significant talent pool that supplies car components to a variety of vehicle categories, including off-road vehicles, passenger vehicles, 2-wheelers, and commercial vehicles.

Business Segments Of Minda Corporation

Minda Corporation has the following business segments – Mechatronics, Information and connected systems, Plastic and Interior, and Aftermarket.

In FY2023, about 44% of the revenue comes from the two- and three-wheeler segments, with PV, CV, and aftermarket accounting for 14%, 30%, and 12% of the total sales, respectively. Mechatronics and aftermarket make up about 48% of the business vertical’s revenue, whereas information and linked systems account for almost 52%.

Mechatronics

The primary activity of Minda Corporation is manufacturing a variety of security items, such as mechanical and keyless locksets, mechatronic handles, immobilizer systems, compressor housings, die-cast aluminium, starter motors, and alternators.

Furthermore, the company keeps focusing on developing solutions that provide increased comfort and safety in order to take advantage of the prospects brought about by the fast growth of electronic components in autos.

Security System:  In India, Spark Minda is a market leader in the two-wheeler lock and key set business. With a market share of more than 40% for the domestic 2W market, its security system division is a leading supplier of electronic, mechanical, and connected vehicle access control for two-wheelers (gasoline and electric) and off-road vehicles.

Die-casting: Minda Corporation’s die-casting segment is a major manufacturer of die-cast aluminium and zinc components for the global automotive and non-automotive industries. Seventeen percent of the company’s overall revenue comes from this sector. 

Starter Motors and Alternators: The company’s segment of starter motors and alternators serves a number of OEM customers both locally and abroad. To increase profitability, this division is focused on product and value engineering.

Information and Connected Systems

This business vertical’s offerings include junction boxes, instrument clusters (speedometers), wiring harnesses, and sensors for location, temperature, speed, and exhaust gas temperature (EGT).

Wiring Harness: A large variety of wiring harnesses, battery cables, wiring sets, connectors, and terminals are produced by this section. Additionally, the division competently provides its clients with a complete solution, from design to subsequent delivery.

Plastic and Interior

In 2017, the Plastic and Interior division was founded, following Minda KTSN’s acquisition of knowledge in value-added plastic technologies such as kinematics and lightweight. A wide variety of products, such as air vents, glove boxes, center consoles, cup holders, ashtrays, louvers, oil slumps, cylinder heads, and battery trays, are offered in this section.

Aftermarket

Minda Corporation is well-known in the aftermarket industry since it markets, sells, and provides several outsourced items in addition to all products made by its group companies. Products at the 2W, 3W, PV, tractors, CV, and off-road vehicle categories include locks, lubricants, filters, clutch plates, bearings, wiper blades, Brake Shoes, and cables.  

Financials Of Minda Corporation

In the fiscal year 2023, Minda Corporation saw a substantial increase in revenue, surging by 44.5% to reach ₹4300.1 crore as opposed to ₹2975.9 crore in FY2022. Analyzing a span of four years, encompassing FY2020 to FY2023, Minda Corporation displayed a  robust Compound Annual Growth Rate (CAGR) of 24.61% in revenue.

Simultaneously, there was a noteworthy upturn in net profit, experiencing a 60% increase from ₹184.5 crore in FY2022 to ₹294.4 crore in FY2023. Over the cumulative four-year period from FY2020 to FY2023, the net profit showcased a 29.49% CAGR.

In FY23, Minda Corporation maintained favorable financial metrics with a Return on Equity (ROE) of 20.22% and a Return on Capital Employed (ROCE) of 16.16%.

Future Outlook Of Minda Corporation

Strategic Partnerships

With the intention of introducing the Next Gen Advanced Driver Assistance System (ADAS) solutions to the Indian automotive market, the business has signed a Technology Licence Agreement (TLA) with DAESUNG, a well-known automotive electronics business with headquarters in Korea.

Additionally, by providing tailored ADAS solutions for the Indian market, Spark Minda has gained a competitive advantage as a result of this partnership. This is consistent with Minda Corporation’s goal of incorporating cutting-edge technology into its daily operations in order to establish itself as a leading supplier of ADAS solutions for the next generation.

The business also signed a Technology Licence Agreement (TLA) with LocoNav to white-label Telematics Software for the Web and Android/iOS platforms, in addition to the ADAS collaborations. For OEMs, Spark Minda will offer a comprehensive solution by integrating its in-house created telematic devices with software produced by LocoNav.

With bespoke solutions to fit Indian OEMs, Spark Minda will be able to stay ahead of the technological curve thanks to this exclusive partnership.

Robust Order Book

More than 30% of the orders Minda Corporation won were for EV platforms, totaling more than Rs. 2,300 crores. The order wins for the entire previous year FY23 was about Rs. 8,000 crores, indicating the company’s expanding product range, product premiumization across segments, and rising customer demand for ICE and EV goods. As of the first nine months of FY24, the order book stood at Rs. 8,900 crores.

Additionally, the company won orders from major domestic and international clients in the areas of die casting, wiring harnesses, vehicle access, and instrument clusters, which demonstrate its growing capacity to provide sustainable mobility solutions. These orders marked multiple first-time-ever orders in new technology products across the ICE and EV segments. 

Minda Corporation is aggressively expanding its capabilities in smart keys, EV products, clusters and cockpits, sensors, and die-casting parts to meet the increasing demand. In keeping with its customer-centric philosophy, the company opened a smart key facility in Vietnam that is ideally situated to service clients throughout Asia. 

Conclusion

Minda Corporation has demonstrated impressive growth, strategic partnerships, and a robust order book, positioning itself as a leader in the Indian automotive component industry. With a strong focus on electric vehicles and advanced technologies, the company seems well-prepared for the future.

However, what do you think about Minda Corporation’s prospects? Can they maintain their momentum and capitalize on the opportunities presented by the rapidly evolving automotive sector? Share your thoughts on Minda Corporation’s future trajectory.

Written by Nalin Suriya S

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As you can see, the Indian auto sector has become a crucial indicator of both the nation’s technological and economic progress. India has emerged as a global leader in the heavy vehicle manufacturing sector, accounting for the top four positions in the passenger car market, second in bus manufacturing, third in heavy truck manufacturing, and
The post Can Minda Corporation Sustain its Multibagger Status After a 104% Rally in 1 Year? appeared first on Trade Brains.   Read MoreCase Study, Financials, Stocks Trade Brains