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Cholamandalam Sec
Minda Ind (Buy)
CMP: ₹876.85
Target: ₹988
In 1QFY18, Minda Industries’ consolidated revenue grew by 25.2 per cent y-o-y to ₹9,450mn, led by Rinder lighting business. Standalone business witnessed muted growth of 5 per cent y-o-y to ₹422.6 crore due to products reaching their maturity phase. Alloy wheel revenue stood at about ₹85 crore.
Consolidated EBITDA margin stood at 10.7 per cent (+100 bps y-o-y), while standalone EBITDA margin stood at 8.1 per cent (-180 bps y-o-y), impacted by increase in other expenses and staff expense. 1Q is a seasonally weak quarter for MIL coupled with annual wage inflation. Consolidated PAT stood at ₹51 crore, (+82 per cent y-o-y), led by robust performance of subsidiaries/JVs, contributing ₹27.1 crore.
Tax rate was relatively high compared to 1QFY17, impacted by factors such as reduction in tax benefit on R&D spending from 200 per cent to 150 per cent and tax benefits from the Pantnagar plant coming to an end. The management expects tax rate to be 27-28 per cent, going ahead.
Risks: Minda Industries is exposed to risk in respect of price availability of certain raw materials such as plastic powder, aluminimum, etc.
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