Minda Corportaion Ltd.: Should you invest?

About the company:

• Minda Corporation Ltd is one of the leading automotive component manufacturing companies for the OEMs in India with a pan-India presence and international footprint.
• It is the flagship company of Spark Minda, which was part of the erstwhile Minda Group.
• The company was formed after a split between the businesses of the Minda brothers in 2012 and was named Minda Industries Ltd and Minda Corporation Ltd respectively. Both the companies are listed on the exchanges.
• Minda Corporation Limited is a diversified company with a product portfolio encompassing from Mechanical & Electronic Security System, Door System, Electronic Controllers for Electric Vehicles, Plastic Interiors and for Auto OEM`s across the Globe.

Headquarter	Noida, Uttar Pradesh
Sector	Auto Ancillaries
Chairman & CEO	Mr. Ashok Minda

Area of Operation:

• For the technological edge, the company has entered into strategic alliances and technical collaborations with leading international companies and acquired businesses across the globe. This has provided Spark Minda with the cutting-edge in product design and technology to meet strict international quality standards.
• The Company is one of the largest suppliers of 2 wheeler, 3 wheeler, and Off-Road vehicles Electronic & Mechanical Security System to OEMs and exports about 20% of its products to the USA, UK, Europe & South East Asia and ASEAN countries.
• It has manufacturing facilities in India, South-East Asia, and Europe.

Board of Committees:

The ratio of remuneration of CEO, Mr. Ashok Minda to the median remuneration of employees for the financial year 2020-21 is coming out to be 85 times, whereas for the CFO it is 64 times and for Mr. Aakash Minda it is 20times.

Subsidiaries:

Huge subsidiary group of more than 15+ companies across different domains of its product portfolios. Also has a considerable stake in making foreign companies across globes for its smooth functioning of manufacturing and exports.

Competitors:

• Sansera Engineering Ltd. (Market Cap of Rs.3900cr)
• Suprajit Engineering Ltd. (Market Cap of Rs.5500cr)
• Motherson Sumi Systems Ltd. (Market Cap of Rs.81,900)

Shareholding pattern:

• Mr.Ashok Minda is the single largest shareholder with 34% share holding in the company.
• LIC of India holds around 2% stake in the company.
• The DIIs or the Mutual Fund groups have substantially increased thier holdings in the company.

Auto Component Industry:

• The Indian auto-components industry has experienced healthy growth over the last few years. The auto-components industry expanded by a CAGR of 3.28% over FY16 to FY20 to reach US$ 45.90 billion in FY21. The industry is expected to reach US$ 200 billion by FY26.
• Auto-components industry account for 2.3% of India’s Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly.
• The rapidly globalising world is opening newer opportunities for the transportation industry, especially while it makes a shift towards electric, electronic and hybrid cars, which are deemed more efficient, safe, and reliable mode of transportation.
• The Indian auto-components industry is set to become the third largest in the world by 2025.
• The growth of the this industry is directly propotional to the growth of the Automobile industry in the world.

Profit and Loss Statement:

Consolidated P&L (in Rs.Crores):

	Mar-16	Mar-17	Mar-18	Mar-19	Mar-20	Mar-21
Revenue from Operations	2,435	2,060	2,594	3,092	2,223	2,354
Expenses	2,206	1,868	2,316	2,797	2,309	2,189
Operating Profit	229	192	278	295	-86	166
Profit before tax	147	131	191	236	-160	84
Net Profit	107	102	143	169	-200	53
EPS in Rs.	5.12	4.88	6.82	7.45	-8.79	2.21

Consolidated P&L (Change %)

	Mar-16	Mar-17	Mar-18	Mar-19	Mar-20	Mar-21	Moving Avergae
Revenue from Operations	–	-15%	26%	19%	-28%	6%	1.50%
Expenses	–	-15%	24%	21%	-17%	-5%	1.36%
Operating Profit	–	-16%	45%	6%	-129%	-293%	-77.49%
Profit before Tax	–	-11%	46%	24%	-168%	-153%	-52.36%
Net Profit	–	-5%	40%	18%	-218%	-127%	-58.23%
EPS in Rs	–	-5%	40%	9%	-218%	-125%	-59.76%

Key Pointers:

1. Expenses of the company majorly include 60% Material cost, 16% Employee cost and just 8% Manufacturing cost.
2. Material cost consist of the major chunk of the expenses in this industry.
3. Financial year March-20 was the most hit by the pandemic and all these mentioned companies gave a negative return.
4. Minda Corporation had a worst impact on their financials in FY ending 2020.
5. The company has delivered a poor sales growth of just 1.50% over past five years which is least among its peers and below par than the Industry CAGR of 3.28%.
6. Poor Operating profit and Net profit returns.
7. After poor 2020 performance, company has started recovering.
8. Consistantly decreasing EPS.

Consolidated Balance Sheet (in Rs.Crores)

	Mar-16	Mar-17	Mar-18	Mar-19	Mar-20	Mar-21
Equity Capital	61	42	46	50	50	52
Reserves	507	580	694	1,145	926	1,095
Borrowings	543	549	723	681	620	528
Trade Payables	424	261	440	410	509	485
Total Liabilities	1,771	1,548	2,051	2,442	2,327	2,328
Fixed Assets	1,771	1,548	2,051	2,442	2,327	2,328
Investments	5	126	139	165	176	180
Other Assets	1,034	818	1,184	1,524	1,552	1,517
Cash Equivalents	88	33	26	353	472	499
Loans n Advances	172	77	92	125	270	151
Total Assets	1,771	1,548	2,051	2,442	2,327	2,328

Standalone Cash Flow (in Rs.Crores)

	Mar-16	Mar-17	Mar-18	Mar-19	Mar-20	Mar-21
Cash from Operating Activity	226	48	70	209	450	86
Profit from operations	254	206	289	312	272	215
Inventory	-49	-123	-146	0	32	-57
Payables	41	13	180	-31	92	43
Working capital changes	13	-126	-174	-42	231	-108
Direct taxes	-41	-31	-45	-61	-52	-21
Cash from Investing Activity	-158	-158	-200	-402	-137	-192
Fixed assets purchased	-98	-158	-196	-120	-148	-135
Interest Recieved	3	6	2	8	47	25
Other investing items	-3	14	-1	-316	-38	-86
Cash from Financing Activity	-29	67	122	203	-249	65
Proceeds from shares	2	0	0	306	0	82
Interest Paid	-33	-24	-36	-40	-40	-32
Dividend Paid	-10	-12	-14	-18	-20	-7
Repayment of borrowings	0	0	0	-122	-231	-93
Net Cash Flow	39	-43	-8	11	64	-42

Financial Ratios:

Stock Price:

1. Current Price	₹ 194.65
2. Market Cap	₹ 4,646 Cr
3. Yearly fluctuation	₹ 90 – 214

Ratios:

	P/E	ROCE	ROE	Op.Margin
Minda Corportaion Ltd.	45.7	7.5%	4.97%	10.69%
Sansera Engineering Ltd	40	12.6%	11.60%	19.19%
Suprajit Engineering Ltd	28.6	16.6%	15.50%	16.47%
Motherson Sumi Systems Ltd	28.2	8.5%	8.97%	8.17%
Auto Ancillaries Industry	46.88	–	–	–

Key Points:

1. Company has a significance presence across the globe. It deals with high range of product portfolio.
2. The Indian Auto-Ancillaries industry has experienced healthy growth over the last few years and is expected to grow in multiples over the next few years.
3. The DIIs or the Mutual Fund groups have substantially increased thier holdings in the company.
4. Company has started to recover from its drastic poor financials for PY 19-20 Minda Corp has reported a poor sales growth over the last few years when compared to the industry and its peers.
5. They have mainted their balance sheet quiet well, overall numbers seems good.
6. Warning: Company has a negative net cash flow. Also the moving average of the net cash flow of the company is -42.6%
7. In the last financial year they have struggled to generate cash from thier operating activities.
8. Irrespective of repaying some of their loans thier cash flow seems to on the poor side.
9. In this size of market cap where Sansera & Suprajit are performing quite well, Minda Corp seems to be lagging.
10. The ratios of the company seems to be on a recoving trend but will take time. At this point of time the overall financials seems a bit week.

Disclaimer: This shouldn’t be construed as a stock recommendation, investors discretion is advised while investing.

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Team, MyGoalMySip.