Minda Corp shares rise 10% on the expected triple revenue growth by FY30; Nuvama increases the target price

Shares of Minda Corp rose to 10% to a day of a day of RS 588 on the NSE on Wednesday after strong guidance shared during the Vision 30 Investor Meet on 23 September of the company.

Minda’s management predicts a triple of income to RS 17,500 crore by FY30, against RS 5,056 crore in FY25 – a compound annual growth rate (CAGR) of 28%. The EBITDA is expected to scale up to RS 2,100 Crore, which implies a CAGR of 30% of FY25-30. Stimulating the momentum are new product launches and fast traction in segments such as smart access, cockpit electronics and EV harnesses.

The net debt of the equity company will probably reduce to 0.3x (versus 0.6x in FY25), led by strong cash flows and a reduction in working capital with RS 1,000 crore, the company said in an investment presentation.

After development, the domestic brokerage Nuvama Institutional shares increased the target price to RS 620 per share, while the buy call was retained on the counter. Analysts predict an upward potential of more than 16% compared to current market levels.

“Minda is a play on premiumization, import replacement, legal changes and disruptions such as EV penetration. It has built a scale by tie-ups, and we predict that the recent Flash takeover will also support increased content per vehicle and customer additives,” Nuvama said in a note of 23 September.

The share of passenger vehicle is expected to rise sharply to 25% of 14% in FY25. The reduction in 2-wheelers contributions, 3-wheelers and commercial vehicles at 40% will predict well for the company, Nuvama noted. “It is expected that the increased PV share will stimulate strong revenue growth and margin extension,” said analysts. From the export of the next five years, the company is aimed at a 37% CAGR during the next five years, which RS has 1,500 crore with a 9% profit-income manual. The export income is expanding with an 18% CAGR compared to FY21-25 to RS 420 Crore, which contributes 8% to the total turnover.

Important risks

Lower than expected growth in the underlying car industry on domestic and foreign markets, which leads to cuts on income assumptions, can hinder the growth and profitability of the company. An increase in competition intensity of local players and cheap import can lead to a loss of market share and margin pressure.

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At about 9.50 am, shares of the company traded on RS 579, higher with 8.5% compared to the last closure of the NSE. Minda Corp shares have risen by more than 11% in the last 6 months.

((Indemnification: Recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)