45% Dividend Ahead: FII-Backed Auto Stock Is Pick of The Week From Axis Sec For 4 Reasons

One of the top producers of automobile components in India is Minda Corporation. Products include Wiring Harnesses, SRCs, Components, Instrument Clusters, Sensors, Die Casting, Key Solutions, Telematics, ITS & IoT, and Electronic and Mechanical Security Systems. Leading manufacturers of off-road vehicles, motorcycles and scooters, commercial vehicles, and passenger vehicles are served by these products. Mutual funds saw a rise in holdings from 13.39% in Q3FY24 to 16.88% in Q4FY24, while promoter holdings remained constant at 64.84% in Q4FY24. FII/FPI saw a spike in holdings in Minda Corporation from 3.73% in the December 2023 quarter to 5.07% in the March 2024 quarter. Based on the four factors listed below, Axis Securities has selected Minda Corporation as its pick of the week with a target price of Rs 502 and recommended a holding period of 6-9 months for a 10% potential upside from the current market price of Rs 456.

Investment Rationale To Buy Minda Corporation.According To Axis Securities

New order wins: During Q4FY24, the company secured lifetime orders worth ~Rs. 2,000 Cr, with EVs constituting over 30% of the orders won. As of Mar'24, the total new lifetime orders amount to Rs 10,000 Cr across various product segments, including vehicle access, driver information systems, die casting parts, electrical distribution systems, and new EV technologies.

EBITDA margin improvement: We expect EBITDA margins to improve from ~11.1% in FY24 to around 12.7% by FY26E. This improvement will be driven by a richer product mix led by premium 2Ws (both ICE and EV), increased wallet share among 4W/CV OEMs, gradual recovery in exports, better operating efficiencies, streamlining of fixed costs, and component localization initiatives.

EV: The potential EV kit value stood at ~Rs 22k-27k in Q4FY24, with Rs 8k-10k coming from new power electronic product lines commercially launched during FY24. In FY24, EVs constituted 5-6% of total revenues. The company has begun commercial production of smart keys in Vietnam, strategically positioned to serve customers in the ASEAN region. In India, new facilities are under construction for manufacturing smart keys, die casting parts, clusters, and sensors.

Outlook & Valuation: We continue to like the company's growth story driven by new order wins, increasing kit value per vehicle, and its focus on EV. With a strong order book and the management's confidence in outpacing industry growth (both organic and non-organic), we estimate a CAGR of 17%/26%/38% in Revenue/EBITDA/Adj PAT over FY24-26E.

Minda Corporation Share Price Target

"We recommend a BUY rating on the stock with a target price of Rs 502/share, implying an upside of 10% from the CMP," said the brokerage firm Axis Sec in a note.

Minda Corporation Upcoming Dividend

"Pursuant to the provisions of the Companies Act, 2013 and Regulations 42 of SEBI (Listing Obligations and Disclosures Requirements) Regulations,2015, it is hereby informed that the Record Date for the purpose of payment of Final Dividend for the year 2023-24 @ 45% i.e. Rs. 0.90/- per share on 239,079,428 equity shares of Rs. 2/- each has been fixed as Wednesday, August 07, 2024. Members whose name shall appear in the Register of Members/ Beneficial Owners' as on the record date shall be entitled to receive the Final Dividend. Dividend shall be paid/dispatched on or before Thursday, September 12, 2024," said Minda Corporation in a statement.

"The Board of Directors of the Company has considered and recommended final dividend @ 45 % i.e. Rs. 0.90 per equity share (face value of Rs. 2 per share) for the financial year 2023- 24 in their meeting held on 22 May 2024. This dividend together with the interim dividend @ 25% i.e. Rs. 0.50 per equity share, aggregating the total dividend for the year 2023-24 to Rs. 1.40/- per equity share i.e. @ 70 %. The register of members & share transfer books of the Company shall remain closed from Thursday, August 08, 2024 to Wednesday, August 14, 2024 (both days inclusive) for the purpose of payment of final dividend (if approved at the ensuing Annual General Meeting for the year 2023-24). The Board of Directors has decided to hold 39th Annual General Meeting of the Company on Wednesday, August 14, 2024. The Board of Directors has decided to transfer the unclaimed dividend amount and shares (held in either physical or dematerialized form) against which dividend remained unpaid for a period of consecutive seven years for the financial year 2016-17, to the demat Account of the IEPF Authority," the company informed to stock exchanges.

Minda Corporation FY24 Performance Updates

With a 13.1% YoY growth, Minda Corporation recorded its highest-ever consolidated quarterly revenue of Rs. 1,215 Cr. The firm had its highest-ever EBITDA of Rs. 139 Cr with a margin of 11.4% in the quarter that ended on March 31, 2024, demonstrating a 52 bps YoY rise. PAT came to Rs. 71 Cr with a margin of 5.8%, while PBT came to Rs. 92 Cr with a 7.5% margin. EVs accounted for more than 30% of the lifetime orders the company obtained throughout the year, totalling over Rs. 10,000 Cr.

Mr. Ashok Minda, Chairman and Group CEO said, "Our resilient performance this year underlines our commitment to sustainable business practices and innovation. Achieving record revenue and robust growth reflects our focus on premiumisation and transformation. As one of the leading players in smart mobility space, our expanding EV order books, investments in advanced technologies and sustainable solutions reaffirm our commitment to driving sustainable growth."

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.