EQUITY RESEARCH-Minda Industries Ltd
July 15, 2009
Stock Overview
- CMP: - 146
- 52 Weeks(Low/High): -73/371
- Target: -243-263
- Return: -66%-80%
- Recommendations: - Buy
"Change is the investor's only certainty."
~Thomas Rowe Price, Jr.
Minda Industries Limited
Minda Group
Minda Group; founded in1958, India’s foremost manufacturer of range
of automotive components & a global supplier to original equipment
manufacturers. Their product portfolio comprises of switches, batteries,
lighting, horns, mirrors & alternate fuel kits- LPG/CNG fuel kits. Minda
Group companies are;
Minda Industries Ltd.
Minda Industries Limited is the flagship company of the Minda
Group. It designs, develops and manufactures switches for 2/3
wheelers and off-road vehicles. In addition, Minda Industries
Limited manufactures batteries for 2/3 wheelers and off-road
vehicles. Minda Industries already enjoys more than 70%
market share in the 2/3 wheeler segment in India and is
amongst the top few globally.
Mindarika Pvt. Ltd.
Mindarika Pvt. Limited is India's largest four wheeler
automotive switch manufacturer. Mindarika Pvt. Limited has
consciously evolved into a complete design and development
centre for four wheeler automotive switches. It offers
customized solutions to the automotive industry in the realm of
product improvisation and new product development and has
very strong localization capabilities.
MIL Lighting
The Lighting division of Minda Industries Limited develops and
manufactures world-class lighting products for 2/3 wheelers,
off-roaders and 4 wheeler vehicles. At the Lighting division, the
emphasis is on rapid development of new products. The mix of
excellent resource planning, latest infrastructure, skilled
manpower and high technological competence helps the
company in its mission to manufacture globally competitive
products. The Lighting Division of Minda has 3 state of the art,
fully equipped manufacturing facilities based at Manesar, Pune
& Sonepat and employ around 500 people.
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Stock in News
- Net profit of Rs 7.11 crore in Q-4
ended March 31, 2009, up 58.35%
over the corresponding period a
year ago
- A dividend of Rs 2.50 per equity
share of Rs 10 each and Re 0.90
per cumulative redeemable
preference shares of Rs 10 each
for the year 2008-09
- Toyota Kirloskar Motor (TKM) had
tied-up with leading CNG kit
supplier Minda Auto Gas to supply
the gas kits which had advanced
Lambda control system that meets
Euro III emission norms- February
28, 2009.
- Delhi government notified that
light commercial vehicles (LCVs),
both three-wheelers and sub-one
ton four wheelers, have to convert
to CNG by September 30 to ply in
the city-Minda to be the Largest
Beneficiary out of 200Cr.revenue
share.
EQUITY RESEARCH-Minda Industries Ltd
July 15, 2009
Minda Fiamm Acoustic Ltd
Minda Fiamm Acoustic Limited is a Joint Venture between
Minda Industries Limited and Fiamm S.p.A, Italy to produce 2/3
wheeler automotive horns. The Company has manufacturing
facilities in Delhi, Gurgaon and Pantnagar and employs over
300 people. Today, Minda Fiamm is the leader player in the
Indian automotive horn industry. It offers customized products
and solutions for a range of automotive acoustic problems.
Minda Fiamm utilizes the experience of its joint venture partner,
FIAMM S.p.A. of Italy, to offer R&D expertise and capabilities to
the Indian customer.
Fiamm Minda Automotive Ltd
FMAL is a Joint Venture of Fiamm SpA with NK Minda Group.
FMAL was established in July 2004 as a part of Fiamm’s global
manufacturing strategy and with a view to enhance Fiamm’s
presence in India and other ASEAN Markets. FMAL services
the requirements of Fiamm’s global customers such as General
Motors, Ford, PSA, Renault, BMW, DC, Mazda and major
domestic customers like Ford India, General Motors India,
Maruti, Tata Motors and Ashok Leyland. FMAL has established
a production capacity of 17 million horns/ annum and FMAL
vision is to supply at least 40% requirement of Fiamm’s global
original equipment (OE) customers.
Minda Autogas Ltd
Minda Autogas Limited began as Minda Impco Limited - a Joint
Venture between NK Minda Group and Impco Technologies
Inc, USA. In April 2006, Impco, as part of their global strategy,
decided to exit all Joint ventures including the one in India.
Today, Minda Autogas Limited is a fully owned company of the
NK Minda Group. Minda Autogas provides CNG / LPG kits and
other alternative fuel solutions to various OEMs and the
replacement market. Minda Autogas has been supplying Maruti
Udyog Limited with the LPG kits for Wagon R Duo.
PT Minda ASEAN Ltd
Recognizing the importance of the ASEAN market, the Minda
Group has set up a Greenfield manufacturing facility in
Indonesia through a company named PT Minda ASEAN
Automotive. The project that was conceptualized in October
2004 began its production in Indonesia in December 2005.
Today PT Minda ASEAN boasts of a state of the art
manufacturing facility in Indonesia. In a short span, the ASEAN
venture started to acquire renowned ASEAN OEM customers
and is today exporting to Malaysia, Vietnam, Philippines &
Thailand. The product range comprises of switches and locks
for two wheelers and is going to start manufacturing other
Group product lines.
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 EQUITY RESEARCH-Minda Industries Ltd
July 15, 2009

Minda Autocare Ltd

Minda automotive components are available to OEMs directly
through the individual Minda Group Companies. For the
replacement market and for retail customers, these products
are available through a dedicated sale and Service Company
called Minda Autocare Ltd. Established in 1985, Minda
Autocare Ltd. is the Sales and Servicing arm for the Minda
group in the replacement market. Minda Autocare Ltd. builds
upon the competitive advantage of Minda Group products
through its countrywide distribution network of more than 250
dealers spread across 91 A, B and C category cities, covering
the 2 wheeler as well as 4 wheeler business segments. Minda
Management Views Autocare's product range spans approx. 2500 parts and
components that it procures from 15 countrywide supply points,
- “But now with sales looking and in turn distributes to its dealer network through 18 Depots
encouraging, we are re-thinking of in all major states of the country. Minda Autocare Ltd. also has
some of the investments,” said Mr aggressive plans to grow internationally, through the
Minda on May 10, 2009 conventional Exports route, as well as through the development
of its own infrastructure and facilities in key geographies
- “As of now signals are better. We
worldwide, in an attempt to tap the vast and growing global
are going back to normal after market for automotive components.
production level. In some
components it is 80-85 per cent of Product Portfolio
capacity utilization. In other parts it The Group has a huge portfolio for 2/3 wheeler segments as
is up to 90 per cent,” said Mr well as Passenger Cars & most important thing to be noticed is
Nirmal Minda on May 10, 2009. the products in their portfolio are mostly necessary products for
vehicles. Their product portfolio mainly consists of;
- “Last year, on a low base, we
Horns: - For 2/3 wheelers & Passenger Cars
grew by 20 per cent. This year,
Lights: - For 2/3 wheelers & Passenger Cars
with more car companies like
Variety of world-class Switches: - For 2/3 wheelers,
Maruti Suzuki preparing to roll out Passenger Cars and off road vehicles. This segment of their
models with factory-fitted CNG Product Portfolio includes; Lever Combination Switches,
kits, we expect to grow 100 per Panel Switches, Power Window Switches, Plunger type
cent,” said Mr Minda on July 5, Switches, Oil Pressure Switches and Heating Ventilation &
2009 Air-conditioning (HVAC) Switches.
Ash Tray & Lighters
CNG & LPG Kits: - Minda Autogas designs and develops
Alternate fuel kits for 2/3 wheelers, Passenger Cars as well
as Gensets.
Batteries

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 EQUITY RESEARCH-Minda Industries Ltd
July 15, 2009

Valuation

Minda Dec '08 Mar '09 Jun '09 Mar '09 Jun '09
Industries
Type of Result Quarter Quarter Quarter(P) Yearly TTM(P)
Sales Turnover 108.97 111 122.30 454.51 472.06
Other Income 0.14 0.47 0.82 3.27 1.58
Total Income 109.1 111.48 123.12 457.78 473.64
Total Expenses 96.56 91.92 101.28 398.89 405.01
Important Stats Operating Profit 12.41 19.08 21.02 55.62 67.05
- % Increase in revenue: - 14.74%
Gross Profit 12.55 19.55 21.84 58.89 68.63
Interest 5.07 3.8 4.12 16.48 17.38
- % Decrease in Expense: -3.92%
PBDT 7.48 15.75 17.72 42.41 51.25
- EPS(TTM): - 14.43 Depreciation 4.63 6.29 5.36 21.44 21.82
- PER: - 10.39 PBT 2.85 9.46 12.36 20.97 29.43
Tax 0.85 2.35 3.46 5.81 8.10
- Industry PER:- 25.71
Net Profit 2 7.11 8.90 15.16 21.33
EPS 1.9 6.77 8.47 14.43 20.30

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 EQUITY RESEARCH-Minda Industries Ltd
July 15, 2009

Analyst View: - The Company had also put on hold Rs 50-crore investment at Bawal to make
lighting products mainly to supply to Maruti. We have not included the figures that would arise
due to CNG Kits Supply. The reason behind is people are not so fast about this CNG
conversion rule by Delhi Government & they are looking for other alternatives. Projections &
circumstances show a prospective conversion of around 15000 LCVs out of 25000 LCVs. This
means the market for this would be around 60% of expected figure which was 375Cr. This
means a revenue increase of 225 Cr. in CNG kits supply segment. Minda being the largest
supplier of CNG kits to original equipment manufacturers (OEMs) would be benefitted in future
& its revenue may spurt in an unprecedented way. According to Industry data taken from
Society of Indian Automotive Manufacturers (SIAM), we found that production of two wheelers
has increased by 76% in Q1-(09-10) as compared to Q4-(08-09) & at the same time total
automobile production has increased by 10.54%. Based on weights we found that sales for the
2/3 wheelers as well as passenger cars in which Minda has around 70% market share would
have increased by 10.18% in Q1-(09-10). Also, due to increased demand, company started
operating on 85-90% capacity again; there would be a reduction in expense of the company.
The stocks of company are priced at a PER of 10.25 while Industry PER is 25.71. We expect its
Trailing Twelve Months EPS to reach at 20.30 & PER to improve and touch a level of 12-13.
Thus, we recommend a buy on this stock with a target of 243-263 in future.

For more details contact: - Dishant Tandon (+919176321422)

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