Can Minda Corporation Maintain Multibagger Status After Gaining 104% in One Year?

As you can see, India’s automotive sector has become an important indicator of the country’s technological and economic development. India has emerged as a global leader in heavy vehicle manufacturing, ranking in the top four in passenger car market, second in bus manufacturing, third in heavy truck manufacturing, and first in two-wheeler and tractor manufacturing.

The environment we live in is always ‘changing’. India’s automotive industry is undergoing rapid transformation with notable developments including the shift to connected vehicles, on-demand mobility, increasing uptake of electric vehicles, and increasing technological content in vehicles.

Even if these modifications have the ability to disrupt the market, they offer a path toward real change, giving auto parts producer Minda Corporation an opportunity to remain at the forefront of its sector.

The stock was just a multibagger, returning 104% over one year. Even in just three years, the stock price has soared a whopping 318%. But can Minda Corporation build on its past outstanding performance? To that end, let’s understand what businesses do and what their future looks like.

Minda Corporation’s corporate overview

Minda Corporation is a prominent automobile component manufacturer headquartered in India with a wide global presence. Founded in 1985, the company is the flagship company of Spark Minda, a former member of the Minda Group.

It has 34 factories and overseas and Indian branches. Minda Corporation has locations in several key locations to stay close to its customers and provide excellent customer service.

Mechatronics, Information and Connectivity Systems, Plastics and Interiors, Aftermarket, Electronic Manufacturing Excellence, Spark Minda Green Mobility, etc. are just some of the products offered by the company.

With over 16,000 employees, Minda Corporation is a significant talent pool that supplies automotive components to various vehicle categories including off-road vehicles, passenger vehicles, two-wheelers and commercial vehicles.

Minda Corporation’s Business Units

Minda Corporation’s business segments include Mechatronics, Information and Connectivity Systems, Plastics and Interiors, and Aftermarket.

In FY2023, approximately 44% of sales will come from the two-wheeler and three-wheeler segment, with PV, CV and aftermarket accounting for 14%, 30% and 12% of total sales respectively. Mechatronics and aftermarket account for approximately 48% of the industry’s sales, while information and associated systems account for approximately 52%.

Mechatronics

Minda Corporation’s primary activity is manufacturing various security items such as mechanical and keyless locks, mechatronic handles, immobilizer systems, compressor housings, die cast aluminum, starter motors and alternators.

Additionally, the company continues to focus on developing solutions that provide improved comfort and safety to capitalize on the prospects of rapid growth in automotive electronics.

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

Die Casting: Minda Corporation’s Die Casting segment is a leading manufacturer of die-cast aluminum and zinc components for the global automotive and non-automotive industries. 17% of the company’s total revenue comes from this segment.

Starter motor and alternator: The company’s Starter Motors and Alternators segment serves numerous OEM customers both domestically and internationally. To increase profitability, the department focuses on product and value engineering.

Information and connected systems

Products in this business segment include junction boxes, instrument clusters (speedometers), wiring harnesses and sensors for position, temperature, speed and exhaust gas temperature (EGT).

Wiring Harness: A variety of wiring harnesses, battery cables, wiring sets, connectors and terminals are produced in this section. Additionally, the division competently provides customers with complete solutions from design to subsequent delivery.

Plastics and Interiors

In 2017, the Plastics and Interiors division was established after Minda KTSN gained knowledge in value-added plastics technologies such as kinematics and lightweighting. This section offers a wide range of products including vents, glove boxes, center consoles, cup holders, ashtrays, louvers, oil slumps, cylinder heads, battery trays and more.

aftermarket

Minda Corporation is well known in the aftermarket industry as it markets, sells and offers several outsourced items in addition to all the products produced by its group companies. Products in the 2W, 3W, PV, Tractor, CV and Off-Road Vehicle categories include fasteners, lubricants, filters, clutch plates, bearings, wiper blades, brake shoes and cables.

Finance of Minda Corporation

In FY 2023, Minda Corporation saw significant growth in its revenue, surging 44.5% to reach ₹4300.1 crore compared to ₹2975.9 crore in FY 2022. Analyzing four years from 2020 to 2023, Minda Corporation recorded a solid Compound Annual Growth Rate (CAGR) of 24.61%.

At the same time, there has been a notable increase in net profit, with a 60% increase from ₹184.5 crore in fiscal 2022 to ₹294.4 crore in fiscal 2023. Cumulative net profit over the four years from fiscal 2020 to fiscal 2023 recorded a CAGR of 29.49%.

In FY23, Minda Corporation maintained favorable financial metrics with return on equity (ROE) of 20.22% and return on equity (ROCE) of 16.16%.

Minda Corporation’s future prospects

strategic partnership

Hyundai Motor Company signed a technology licensing agreement (TLA) with Daesung, a renowned automotive electronics company headquartered in Korea, to introduce next-generation advanced driver assistance system (ADAS) solutions to the Indian automobile market.

Additionally, Spark Minda gains a competitive advantage as a result of this partnership by providing customized ADAS solutions to the Indian market. This is consistent with Minda Corporation’s goal to integrate cutting-edge technologies into its daily operations to establish itself as a leading provider of next-generation ADAS solutions.

In addition to the ADAS collaboration, the company also signed a Technology License Agreement (TLA) with LocoNav for white labeling of its telematics software for web and Android/iOS platforms. For OEMs, Spark Minda will integrate its telematics devices with software produced by LocoNav to provide a comprehensive solution.

This exclusive partnership will enable Spark Minda to stay ahead of technological advancements with customized solutions for Indian OEMs.

solid order book

Over 30% of the orders received by Minda Corporation were for EV platforms, with a total value of over Rs. 230 billion. The order book for the entire previous year FY23 was approximately Rs. The $8 billion represents the company’s product line expansion, product premiumization across segments, and increased customer demand for ICE and EV products. The current order book for the first nine months of FY24 is Rs. $890 billion.

The company has also received orders from major domestic and international customers in the areas of die casting, wiring harnesses, vehicle access and instrument clusters, demonstrating its growing capacity to provide sustainable mobility solutions. This order marks several first-ever orders for 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 components to meet growing demand. In line with its customer-centric philosophy, the company has opened a Smart Key facility in Vietnam, ideally located to serve customers across Asia.

conclusion

Minda Corporation has established itself as a leader in the Indian auto component industry by demonstrating impressive growth, strategic partnerships and robust order book. With a focus on electric vehicles and cutting-edge technology, the company seems well-prepared for the future.

By the way, what do you think about Minda Corporation’s prospects? Can they maintain the momentum and capitalize on the opportunities offered by the rapidly evolving automotive sector? Please share your thoughts on the future trajectory of Minda Corporation.

A work written by Nalin Surya S.

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