ICICI Direct's research report on Minda Corporation
Minda Corporation (MCL) reported strong Q3FY21 results. Consolidated net sales rose 36% YoY to Rs 740 crore (like-to-like basis) – far outpacing the growth observed in the domestic OEM space. Blended operating margins rose 100 bps QoQ to 11.1% (110 bps increase in mechatronics division to 13.8%; 40 bps increase in information connected systems division to 7.1%) amid 80 bps QoQ gross margin expansion and 80 bps savings in other expenses on percentage of sales basis. Consequent consolidated PAT was up 19% YoY to Rs 49.5 crore.
FY21E-23E PAT CAGR at MCL is seen at ~62% (albeit on a low base). Broad-based positivity across served segments domestically, new order wins along with structural margin tailwinds help us maintain BUY on MCL. We value it at Rs 120, 15x P/E FY23E EPS (previous target price Rs 105) and remain enthused by its long term vision to clock ~12% margins and ~20%+ RoIC.
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