buy mind-india equity research i construction result update (small cap)

7/24/2019 Buy Mind-India Equity Research I Construction Result Update (Small Cap)

1/5

KRChoksey - Institutional Research is also available on Bloomberg KRCS, Thomsonreuters, Factset and Capital IQ February 04, 2016

ndia Equity Institutional Research |Automobiles RESULT UPDATE

Minda Industries Ltd. INR 886

Profit boosted by margins ACCUMULATE

n 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

ecreased by 4.0% q-o-q. EBIDTA stood at INR 589 Mn(our estimates of INR

64mn) and EBIDTA margins of 9.4 % respectively. In Q3FY16, growth in

BITDA is about 45.2% y-o-y and de-growth of 6.8% q-o-q. Adjusted PAT

tood at INR 292Mn which is higher than our estimates of INR 271mn. PAT

aw 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

f 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

eceived from its customers and also addition of new products in its business

egments. Going forward its revenue expansion will continue as it has started

peration at the Clartons new facility at Mexico, orders received from Jaguar/ Land

over model for its lighting division. Minda Industries has also started supply its

roduct to its customer KTM, Austria which will help in gaining revenue for FY16.

Margin surprise boosted profitability: MIL reported EBIDTA of 589 Mn withrowth of 45.2% y-o-y and de-growth of 6.8% q-o-q. EBIDTA margin remained at

.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

here was also expense incurred for employee cost around 34.3% y-o-y and 9.1% q-

-q due to bonus provision made for FY16. Reported PAT stood at INR 289Mn, up by

23.5 y-o-y and 10.5% Q-o-Q. PAT margins was at 5.0% and increase to 275bps y-

-y and 92bps q-o-q. PAT saw an increase due to higher other income during Q3FY16

f 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%.

ncreasing Market Penetration through Acquisition: The Companys broader

ange of products and innovation has helped the company in acquiring more

ustomers in both domestic and international markets. Companys recent acquisition

f global companies has also resulted in gaining access to international clients

hereby expanding its market share. Minda Industries is the market leader in the

witch segment. Clarton Horn's new facility (CKD based) in Mexico, is now operational

nd commercial production will start from April 2016. Clarton Horn's supplies to

remium car makers like Mercedes, BMW, Porsche and Bentley. Through this

cquisition, the company gets access to these luxury OEMs to supply its other

roducts. 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

as potential for growth because of its better capacity utilization, tie up with global

rands, innovative portfolio and large order inflow. The stock is currently trading0.8x its FY 18E EPS of INR 82.1 respectively. We are valuing company 12x its FY18e

PS 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

evels.

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 12ource: Company Data, KRChoksey Research

Target Price (TP): INR 985

Potential Upside : 11.17%

Market DataShares 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

NIFTY7455

Price Performance

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

Name of Analyst:

Analyst :Abhishek Jain

[email protected]

91-22-6696 5502

www.krchoksey.com

91-22-6696 5555

91-22-6691 9569

80

120

160

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

Jan-16

Sensex Minda Ind.


2/5

Minda Industries Ltd.

KRChoksey - Institutional Research

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%

ource: Company Data, KRChoksey Research

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.


3/5



Profit & Loss Statement (INR Mn)

Particulars FY11 FY12 FY13 FY14 FY15

Revenues 9542 11792 13404 17061 22266

Op. Expenses 8705 11033 12469 16466 20753

BITDA 837 759 935 595 1514

Other Income 146 163 110 352 259

Depreciation 339 402 463 591 835

BIT 644 520 582 356 938

nterest 167 198 191 242 250

PBT 477 322 391 114 688

ax 122 0 110 76 194

xceptional 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)


quity 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 1707ong 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

hort-term borrowings 950 938 808 1402 1116

rade 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 5216ixed assets 2573 2797 3608 4224 4205

Non-current investments 189 217 218 244 263

ong-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

rade receivables 1308 1963 2173 2610 2895

nventories 838 808 895 1247 1406

Cash & bank balances 229 666 385 278 280

hort-term loans & adv 287 557 562 690 806Other current assets 23 44 60 106 84

Total Assets 5596 7578 8568 10354 10709



4/5



Cash Flow Statement (INR Mn)


BT 340 334 385 337 697

Adjustment 458 428 491 487 542

CF before W.cap 798 762 876 824 1239nc/dec in W.cap -333 136 68 -150 2

Op CF after W.cap 465 898 944 674 1241

ess 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


arnings Per Share (INR) 26 18 18 5 43

BITDA (%) 10 7 7 5 8

AT (%) 3 2 2 0 3

ROE (%) 29 11 10 2 20

ROCE (%) 20 11 12 7 18

Receivable days 39 47 52 48 42

nventory Days 24 24 21 21 20

ayable days 51 51 58 53 46

Net Sales Growth (%) 53 24 14 27 31

BITDA Growth (%) 34 -6 13 -9 87

AT Growth (%) 52 -32 17 -81 1125

BVPS 120 178 192 195 228

E (x) 20 30 30 117 12

V/EBITDA(x) 14 15 12 21 8



5/5



NALYST CERTIFICATION:

Abhishek Jain (MBA, CFA & PGDM) research analyst, author and the name subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflecty views about the subject issuer(s) or securities. I also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) orew(s) in this report.

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