Minda Industries Research Report By Sushil Finance

FY14 was broadly a low year for the automobile industry witnessing the slowdown. The financials of Minda Industries were further impacted negatively as the company was in investment mode and most of the capacities of the company were under-utilized.

Consequently, the bottom-line turned extremely weak despite a robust growth in the turnover. We believe, the current fiscal would be a turnaround year for Minda Industries as indicated in the Q1 performance (which is seasonally a weak quarter). During the current fiscal, not only the recently expanded facilities would start functioning, the improving capacity utilization levels and profitability would result into a substantial jump in the profits of the company. In light of strengthening auto-demand and enhanced sector outlook we remain bullish about the business.

We upgrade Minda Industries from HOLD to BUY with the increased target price of Rs 602 (13x of FY16 EPS of Rs.46.3) as we introduce FY16 to our financial model. The stock is currently trading at 9.4x of its FY16 earnings.

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