Religare Investment Call

Transcription

1 BUY CMP (Rs) Target Price (Rs) Potential Upside Sensex Nifty Key Stock data BSE Code NSE Code Bloomberg Shares o/s, Cr (FV 2) Market Cap (Rs Cr) 3M Avg Volume 52 week H/L Shareholding Pattern (%) Promoter FII DII 1 Year relative price performance Feb-16 Mar-16 Apr-16 May-16 Jun-16 Research Analyst Jun Jul-16 Aug-16 Minda Corp Sep-16 Ajay Pasari, CFA ajay.pasari@religare.com % 28,865 8, MINDACORP MDA:IN , ,481 85/143.3 Sep-16 Dec-16 Oct Nov-16 Ni y Dec-16 Jan Feb-17 Subdued quarter; temporary headwinds Minda Corp reported poor set of numbers, partially hit by demonetization, higher material costs in its subsidiary Minda Furukawa and pre-operative expenses related to the Mexico plant and technical centre in Pune. As a result, though Net revenue increased by 10%, Net profit slumped by 36.3% on YoY basis. We expect margins to improve from FY18E with recovery in demand, cost rationalization measures, localization efforts and focus on high yield products. Maintain Buy. : Total consolidated revenue increased by 10% to Rs. 723 cr compared to Rs cr in the same quarter last year. Revenue growth came from interior systems (+18% YoY) and safety security systems (+16% YoY). The company disappointed on margins front, wherein EBITDA margin stood at 3.4% against 10.4% on YoY basis. Operational profit declined by 63.8% to Rs. 2 cr led by high material cost in Minda Furukawa (subsidiary) and pre-operative expenses in the Mexico plant and Spark Minda technical centre in Pune. The management has guided to improve operational margins to ~10% in FY18E, though we prefer to remain conservative for now. Net profit declined by 36.3% led by weak operational performance and higher tax expenses. Net profit stood at Rs. 2 cr compared to Rs cr in Q3FY16. As a result, Net profit margin declined from 4.8% to 2.8% on YoY basis. Outlook & Valuation: We remain positive on the business of the company with diversified product base and strong clientele. The management is taking steps to improve margins by focusing on localization and cost rationalization in its subsidiary; Minda Furukawa. It is considering exiting loss making products and pricing negotiations with OEMs and JV partners. It has significant order book for compressor housing and turbochargers which shall aid in revenue growth. Its subsidiaries, Minda SAI got order for ABS wiring harness and Minda Stoneridge being leader in emission and soot sensors will benefit from new regulatory norms. We expect consolidated Revenue and Net profit to grow at CAGR of 15.6% and 18.4% respectively over FY16-19E. We maintain a Buy on the stock with a target of Rs Financial Summary - Consolidated Particulars, Rs cr Net revenue EBITDA OPM (%) APAT APATM (%) EPS, Rs RoE (%) P/E (x) FY15 FY16 FY17E FY18E 1, , , , , February 23, 2017

2 P&L Account Quarterly Particulars, Rs cr Q3FY17 Q3FY16 Y-o-Y% Q2FY17 Net Revenue Material cost Employee cost Other expenses Total expenditure Q-o-Q% EBITDA OPM (%) bps bps Other income Depreciation PBIT Interest expenses PBT Exceptional items Tax Tax/PBT % ,566bps ,043bps PAT Minority interest APAT APATM (%) bps bps EPS Q3FY17 Revenue mix: Product category Q3FY17 Revenue mix: End user category 14% 10% 39% 28% 36% 47% 25% Safety, Security & Restraint Systems Driver Informa on & Telema cs Systems Interior Systems Passenger Vehicles Commercial & Off-Highway Vehicles 2/3 Wheelers A er Market

3 P&L Account - Consolidated Net sales Other operating income Total income Expenditure Raw material consumed Employee cost Other expenses Total expenditure 1, , , , , , , , , , , , , , , , , , , ,431.3 EBITDA OPM (%) Other income Depreciation PBIT Interest expenses PBT Exceptional items Tax Tax rate % PAT Less: Share of minority interest Add: Profit/Loss of associates Adjusted Net Profit PATM (%) EPS

4 Balance sheet - Consolidated Share Capital Reserves & Surplus Total Shareholder's Fund Minority interest 24.2 Non-Current Liabilities Long term borrowing Deferred tax liability 5.7 Other long term liabilities Long term provision Current Liabilities , , ,078.2 Short term borrowing Trade payables Short term provisions Other current liabilities Total liabilities 1, , , , ,278.3 Fixed Assets Goodwill on Consolidation Non Current investment 28.9 Long Term loans & advances Other non-current assets Current Assets , , ,26 1,447.0 Inventories Trade receivables Cash & Cash equivalents Short term loans and advances Other current assets Total assets 1, , , , ,278.3

5 Cash Flow statement - Consolidated Profit Before Tax Add: Depreciation Add: Interest cost Op profit before working capital changes Changes In working Capital Direct taxes Cash Flow From Operating Activities Cash Flow from Investing Activities Purchase of Fixed assets Sale of Fixed assets Net proceeds from Investment Cash Flow from Investing Activities Cash from Financing Activities Proceeds from issuance of shares Net proceeds from borrowings Dividend (incl dividend tax) Interest cost Cash Flow from Financing Activities Net Cash Inflow / Outflow Opening Cash & Cash Equivalents Closing Cash & Cash Equivalent

6 Key Financial ratios - Consolidated Dividend per share Rs Dividend Yield (%) Payout % EPS Rs Book Value per share Rs Profitability Ratios EBITDA / Total income (%) PBT/Total income (%) NPM / Total income (%) ROCE (%) ROE (%) Liquidity ratios Debt-Equity Ratio Current Ratio Interest Cover Ratio Turnover ratios Total Asset Ratio Fixed Assets Ratio Debtors Velocity Overall (Days) Inventory (Days) Creditors Velocity (Days) Cash Conversion cycle GROWTH YOY% Sales Growth % Operating Profit % Net Profit Growth % VALUATION P / E Ratio P / BV Ratio EV / EBITDA

7 Before you use this research report, please ensure to go through thedisclosure inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 and Research Disclaimer at the following link : Specific analyst(s) specific disclosure(s) inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 is/are as under: Statements on ownership and material conflicts of interest, compensation Research Analyst (RA) [Please note that only in case of multiple RAs, if in the event answers differ inter-se between the RAs, then RA specific answer with respect to questions under F (a) to F(j) below, are given separately] S. No. Statement Answer Tick appropriate YES I/we or any of my/our relative has any financial interest in the subject company? [If answer is yes, nature of Interestis given below this table] I/we or any of my/our relatives, have actual/beneficial ownership of one per cent. or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance? I / we or any of my/our relative, has any other material conflict of interest at the time of publication of the research report or at the time of public appearance? I/we have received any compensation from the subject company in the past twelve months? I/we have managed or co-managed public offering of securities for the subject company in the past twelve months? I/we have received any compensation for brokerage services from the subject company in the past twelve months? I/we have received any compensation for products or services other than brokerage services from the subject company in the past twelve months? I/we have received any compensation or other benefits from the subject company or third party in connection with the research report? I/we have served as an officer, director or employee of the subject company? I/we have been engaged in market making activity for the subject company? Nature of Interest ( if answer to F (a) aboveis Yes :... Name(s)with Signature(s)of RA(s). [Please note that only in case of multiple RAs andif the answers differ inter-se between the RAs, then RA specific answer with respect to questions under F (a) to F(j) above, are given below] SS.No Name(s) of RA Signatures of RA Serial Question of question which the signing RA needs to make separate declaration / answer YES Copyright in this document vests exclusively with RSL. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose, without prior written permission from RSL. We do not guarantee the integrity of any s or attached files and are not responsible for any changes made to them by any other person. Disclaimer: