Cholamandalam securities is bullish on Minda Industries has recommended buy rating on the stock with a target price of Rs 365 in its research report dated February 08, 2019.
Cholamandalam securities' research report on Minda Industries
In 3QFY19, MIL’s consolidated revenue grew robustly by 39.2% YoY to INR 14.7bn primarily driven by Switches segment and Others (Alloy wheel, Aluminium die casting, Blow molding) which grew by 70%/ 50% YoY respectively. The inorganic inclusion of MRPL and I-Sys also contributed to growth. Mindarika and Minda Kosei had seen some volume impact on account of lower 4W OEM sales. Consolidated EBITDA margin was at 12.3% up by 30 bps YoY. The EBITDA margin for Switching, Lighting and Acoustics stood at 12%/11%/8%. PAT grew by 23.1% YoY to INR 0.81bn. Finance costs increased by 107% YoY on account of setting up of new plants and acquisitions. Depreciation increased by 44.8% YoY because of capitalization of new projects in Gujarat. Profits from JVs/Associates declined by 65% YoY due to delays in getting export orders. The management expects the profitability of JVs to improve in 4QFY19.
We introduce and roll over our valuations to FY21E. At CMP, the stock is trading at a valuation of 16.7XFY20E and 14.3XFY21E earnings. We give a BUY rating on the stock and arrive at a revised target price of INR 365; valuing the company at a P/E of 18X FY21E EPS.
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