ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 13 August 2019 | 1

Current Reco : BUY 1QFY20 RESULT REVIEW

Previous Reco
CMP
: BUY
: INR85
Minda Corporation
Target Price : INR104 Europe continues to remain a drag
Potential Return : 22%
Minda Corporation (MDA IN) consolidated revenue came in 6% below our
https://www.euromoney.com/Brokers
Asiamoney Brokers’ Poll 2019 estimates at INR7.1bn, down 9% YoY and 8% QoQ. While the revenues for
https://www.euromoney.com/Brokers
https://www.euromoney.com/Brokers Safety & Security (up 2.6% YoY) and Driver Info & Telematics (down 1.3%
 Vote for ANTIQUE
https://www.euromoney.com/Brokers
https://www.euromoney.com/Brokers YoY) managed to outperform the domestic industry on account of ramp up of
https://www.euromoney.com/Brokers
Voting closes on 16th August
https://www.euromoney.com/Brokers die casting facility and content per vehicle gains in its wiring harness
https://www.euromoney.com/Brokers business, KTSN continued to remain a drag. Revenues dropped by 38% YoY
Priya Ranjan to INR1.24bn due to sharp fall in tooling sales. Adjusted for IND AS 116 consol
+91 22 4031 3466 EBITDA magins came in 100bps below our estimates at 8.5%, down 90bps
[email protected] YoY and 210bps QoQ. YoY decline in margins primarily due to decline in
Vikrant Gupta operating leverage with Minda KTSN margins dropping by 650bps YoY to
+91 22 4031 3429 0%. Consolidated PAT came in 40% below our estimates at ~INR212mn,
[email protected] down 44% YoY and 46% QoQ due to lower operating profit and decline in
Apoorva Patil profitability of JVs. Share of profits from JVs (VAST/Stone Ridge/Furukawa)
+91 22 4031 3428 came in at INR ~28.3mn, down 42% YoY and 55% QoQ. We maintain a
[email protected] positive view on the domestic business of MDA given the robust traction
witnessed in its die casting business and content per vehicle gains due to
Market data increase in use of wiring harness post the implementation of BS VI norms,
Sensex : 37,582 however the sustained weakness in its European plastics business remains
Sector : Auto a concern. We have reduced our revenue estimates by 6%/9% and EBITDA
Market Cap (INRbn) : 19.4 margin assumptions by 90bps and 20bps for FY20/21e respectively and
Market Cap (USDbn) : 0.274 expect an earnings CAGR of 2% over FY19-21e.
O/S Shares (m) : 227.2 Key takeaways from conference call:
52-wk HI/LO (INR) : 164/79
 The domestic businesses managed to outperform the market with revenues flat YoY while
Avg Daily Vol ('000) : 40
the European business declined by 38% YoY.
Bloomberg : MDA IN
Source: Bloomberg  Key new order wins for the quarter were die casting (Lifetime value of ~INR2.9bn),
wiring harness with global 2W OEM (lifetime value of ~INR4.2bn) and with domestic
Valuation PV OEM (lifetime value of ~INR3.75bn), locksets (lifetime value of ~INR1.2bn) and
FY19 FY20e FY21e instrument clusters (lifetime value of ~INR0.9bn). Total order wins in Q1FY20 had a
EPS (INR) 6.6 5.8 6.9 lifetime value of ~INR4.3bn
P/E 12.9 14.7 12.3
 The management exuded confidence in gaining market share in the two-wheeler wiring
P/BV 1.6 1.4 1.3
harness space. The current business opportunity is ~INR10bn with MDA having a share
EV/EBITDA 7.2 8.8 7.2
of ~35%; post the introduction of EFI systems, the business opportunity would be ~INR24bn
Dividend Yield (%) 0.7 0.9 0.9
with MDA aiming to garner a share of ~40%.
Source: Company, Antique
 The management believes that smart keys is a huge opportunity, going forward, in line
Returns (%) with the trend in premiumization being witnessed with adoption of AMT/LEDs/Alloy
1m 3m 6m 12m Wheels. The expected penetration of smart keys is ~25% in five to seven years from low
Absolute (15) (25) (37) (46) single digits currently.
Relative (12) (25) (39) (45)
 Revenue from the die casting plant was INR1bn for the quarter with the plant operating
Source: Bloomberg
at ~75% capacity utilization. Peak annual revenue from the plant is expected to be
Shareholding pattern ~INR5bn with EBITDA margin in the range of 13-15%. The facility would be concentrating
on gravity die casting and low pressure die casting, which have higher margins as
Promoters : 68% compared to high pressure die casting.
Public : 30%
 The capex guidance for FY20e is ~INR1.5bn and the management has guided that all
Others : 2%
non critical capex will be postponed
Source: Bloomberg
 The company has completed the merger of its wholly-owned domestic subsidiaries, namely,
Price performance vs Nifty Minda SAI, Minda Automotive, Minda Autoelectric, Minda Telematics and Minda
Management Services..
125
105 Valuation and outlook
85
65 We have a BUY on MDA with a price target of INR 104 (earlier INR136), valuing it at
45 15FY21e EPS. Key risks to our estimates are slowdown in new order wins, increasing raw
Aug-18 Dec-18 Apr-19 Aug-19 material costs, slower-than-expected rationalization of employee costs, and value-dilutive
acquisitions.
Minda Corp NIFTY
Source: Bloomberg Indexed to 100
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 13 August 2019 | 2

Consolidated financial
INRm 1QFY20 1QFY19 YoY (%) 4QFY19 QoQ (%)
Net Sales 7,083 7,783 (9) 7,714 (8)
- Raw Material 4,238 4,913 (14) 4,567 (7)
(% of Net Sales) 59.8 63.1 (330) 59.2 63
- Staff Expenditure 1,296 1,235 5 1,274 2
(% of Net Sales) 18.3 15.9 242 16.5 178
- Other Expenditure 879 903 (3) 1,052 (16)
(% of Net Sales) 12.4 11.6 81 13.6 (122)
Total Expenditure 6,413 7,052 (9) 6,893 (7)
EBITDA 670 731 (8) 821 (18)
EBITDA Margin (%) 9.5 9.4 6 10.6 (119)
Depreciation 301 210 43 241 25
EBIT 369 521 (29) 580 (36)
Interest 151 110 37 131 15
Other Income 82 46 77 68 20
PBT 300 457 (34) 518 (42)
Tax 117 131 (11) 190 (39)
PAT after MI & associates 212 376 (44) 391 (46)
Adjusted PAT 212 376 (44) 391 (46)
Source: Company, Antique
ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 13 August 2019 | 3

Financials
Profit and loss account (INRm) Cash flow statement (INRm)
Year ended 31 Mar 2017 2018 2019 2020e 2021e Year ended 31 Mar 2017 2018 2019 2020e 2021e
Net Revenue 20,598 25,935 30,919 30,694 32,229 PBT 1,446 1,782 1,907 1,652 2,069
Op. Expenses 18,711 23,208 27,994 28,176 29,201 Depreciation & amortisation 577 738 883 858 1,015
EBITDA 1,887 2,727 2,925 2,518 3,028 Interest expense 269 370 490 381 335
Depreciation 577 738 883 858 1,015 (Inc)/Dec in working capital (1,264) (1,745) (1,745) (650) (147)
EBIT 1,310 1,989 2,042 1,660 2,013 Tax paid (288) (496) (686) (601) (753)
Other income 405 163 355 373 391 CF from operating activities 740 649 849 1,640 2,519
Interest Exp. 269 370 490 381 335 Capital expenditure (1,384) (1,939) (466) (2,000) (1,611)
Reported PBT 1,446 1,782 1,907 1,652 2,069 Inc/(Dec) in investments (379) (63) - - -
Tax 288 496 686 601 753 CF from investing activities (1,763) (2,002) (466) (2,000) (1,611)
Reported PAT 1,158 1,286 1,221 1,051 1,316 Inc/(Dec) in share capital - - 3,102 - -
Minority Int./Profit (loss) From Asso. (137) 131 280 266 253 Inc/(Dec) in debt 1,042 1,922 (569) (569) (569)
Net Profit 1,021 1,417 1,501 1,316 1,568 Dividend Paid (123) (145) (159) (212) (212)
Adjusted PAT 1,021 1,417 1,501 1,316 1,568 Others (444) 1,183 1,665 1,348 766
Adjusted EPS (INR) 4.5 6.3 6.6 5.8 6.9 CF from financing activities 475 2,960 4,039 567 (15)
Net cash flow (548) 1,607 4,422 207 893
Balance sheet (INRm) Opening balance 882 (1,346) (891) 1,801 907
Year ended 31 Mar 2017 2018 2019 2020e 2021e Closing balance 334 261 3,530 2,008 1,799
Share Capital 415 415 453 453 453
Reserves & Surplus 5,805 6,958 10,841 11,946 13,303 Growth indicators (%)
Networth 6,220 7,373 11,294 12,398 13,755 Year ended 31 Mar 2017 2018 2019 2020e 2021e
Debt 4,690 5,898 5,329 4,760 4,191 Revenue(%) (15.8) 25.9 19.2 (0.7) 5.0
Net deferred Tax liabilities 92 134 331 283 283 EBITDA(%) (15.5) 44.5 7.3 (13.9) 20.3
Capital Employed 11,002 13,405 16,953 17,441 18,229 Adj PAT(%) 9.2 38.8 5.9 (12.3) 19.2
Gross Fixed Assets 5,920 8,442 8,860 10,860 12,471 Adj EPS(%) 9.2 38.8 5.9 (12.3) 19.2
Accumulated Depreciation 609 672 1,555 2,413 3,428
Capital work in progress 731 162 210 162 162 Valuation (x)
Net Fixed Assets 6,042 7,932 7,515 8,609 9,206 Year ended 31 Mar 2017 2018 2019 2020e 2021e
Investments 1,257 1,393 1,650 1,915 2,168 P/E 18.9 13.6 12.9 14.7 12.3
Non Current Investments 1,257 1,393 1,650 1,915 2,168 P/BV 2.8 2.4 1.6 1.4 1.3
Current Assets, Loans & Adv. 8,179 11,185 15,780 16,103 16,483 EV/EBITDA 12.5 9.1 7.2 8.8 7.2
Inventory 3,064 4,479 4,464 5,130 5,298 EV/Sales 1.1 1.0 0.7 0.7 0.7
Debtors 3,741 5,705 5,464 6,643 7,064 Dividend Yield (%) 0.6 0.6 0.7 0.9 0.9
Cash & Bank balance 334 261 3,530 2,008 1,799
Loans & advances and others 1,040 740 2,322 2,322 2,322
Financial ratios
Current Liabilities & Prov. 4,476 7,105 7,991 9,186 9,628
Year ended 31 Mar 2017 2018 2019 2020e 2021e
RoE (%) 17.5 20.8 16.1 11.1 12.0
Liabilities 1,672 2,489 3,799 3,799 3,799
RoCE (%) 15.7 17.6 15.8 11.8 13.5
Provisions 2,804 4,616 4,192 5,388 5,829
Asset/T.O (x) 2.0 2.4 2.3 2.0 2.0
Net Current Assets 3,703 4,080 7,789 6,916 6,855
Net Debt/Equity (x) 0.8 0.8 0.5 0.4 0.3
Application of Funds 11,002 13,405 16,954 17,441 18,229
EBIT/Interest (x) 6.4 5.8 4.9 5.3 7.2
Per share data
Year ended 31 Mar 2017 2018 2019 2020e 2021e
Margins (%)
No. of shares (m) 208 208 226 226 226
Year ended 31 Mar 2017 2018 2019 2020e 2021e
EBITDA Margin(%) 9.2 10.5 9.5 8.2 9.4
Diluted no. of shares (m) 207 207 207 207 207
EBIT Margin(%) 6.4 7.7 6.6 5.4 6.2
BVPS (INR) 30 36 54 60 66
PAT Margin(%) 4.9 5.4 4.8 4.2 4.8
CEPS (INR) 8 10 10 9 11
DPS (INR) 0.50 0.50 0.60 0.80 0.80 Source: Company Antique

Source: Company, Antique

ANTIQUE STOCK BROKING LIMITED FROM THE RESEARCH DESK 13 August 2019 | 4

Important Disclaimer:

This report has been prepared by Antique Stock Broking Limited (hereinafter referred to as ASBL) to provide information about the company(ies) and/sector(s), if any, covered in the report and may be distributed
by it and/or its affiliated company(ies).

ASBL is a Stock Broker having SEBI Registration No. INZ000001131 and Depository Participant having SEBI Registration No. IN-DP-CDSL-726-2014 registered with and regulated by Securities & Exchange Board
of India.

ASBL and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group.

This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement
to invest in securities or other investments and ASBL is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your general information and should
not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs
of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice.
The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future
performance, future returns are not guaranteed and a loss of original capital may occur.

We and our affiliates have investment banking and other business relationships with a some companies covered by our Research Department. Our research professionals may provide input into our investment banking
and other business selection processes. Investors should assume that ASBL and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of
this material and that the research professionals who were involved in preparing this material may educate investors on investments in such business. The research professionals responsible for the preparation of
this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting information. Our research professionals are paid on the profitability
of ASBL which may include earnings from investment banking and other business.

ASBL generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
Additionally, ASBL generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders,
and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary
trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing
among other things, may give rise to real or potential conflicts of interest. ASBL and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position
in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation
or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with
respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations
made by the analyst(s) are completely independent of the views of the affiliates of ASBL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report

Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and,
as such, may not match with a report on a company's fundamental analysis. In addition ASBL has different business segments / Divisions with independent research separated by Chinese walls catering to different
set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.

Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt ASBL or any of its affiliates or
employees from, any and all responsibility/liability arising from such misuse and agrees not to hold ASBL or any of its affiliates or employees responsible for any such misuse and further agrees to hold ASBL or
any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained
herein is based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent ASBL's interpretation of the data, information and/
or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete
statement or summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, ASBL and/or its affiliates are under
no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent ASBL and/or its affiliates from doing so. ASBL or any of its affiliates or employees shall not
be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. ASBL or any of its affiliates or employees do not
provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose,
and non-infringement. The recipients of this report should rely on their own investigations.

This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based
on this report or for any necessary explanation of its contents.

ASBL and it's associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received
any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.

ASBL and it's associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.

Subject Company may have been a client of ASBL or its associates during twelve months preceding the date of distribution of the research report

ASBL and/or its affiliates and/or employees and /or relatives may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research
in the securities mentioned in this report. To enhance transparency, ASBL has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed
in the report.

There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be
directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation
of ASBL research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues

Disclosure of Interest Statement Companies where there is interest

 Analyst ownership of the stock - No

 Served as an officer, director or employee - No

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to
law, regulation or which would subject ASBL & its group companies to registration or licensing requirements within such jurisdictions.

For U.S. persons only: This research report is a product of Antique Stock Broking Limited, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing
the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-
dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject
company, public appearances and trading securities held by a research analyst account. This report is intended for distribution by Antique Stock Broking Limited only to "Major Institutional Investors" as defined
by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient
of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted
onward to any U.S. person, which is not the Major Institutional Investor. In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order
to conduct certain business with Major Institutional Investors, Antique Stock Broking Limited has entered into a chaperoning agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo").
Transactions in securities discussed in this research report should be effected through Marco Polo or another U.S. registered broker dealer.

SEBI Registration Number: INH000001089 as per SEBI (Research Analysts) Regulations, 2014.

CIN: U67120MH1994PLC079444
Antique Stock Broking Limited
20th Floor, A Wing, Naman Midtown
Senapati Bapat Marg, Elphinstone (West)
Mumbai 400013
Tel. : +91 22 4031 3444 • Fax : +91 22 4031 3445
www.antiquelimited.com