Brokerage house Anand Rathi upgraded Minda Industries to 'buy' even after the firm reported a fall in its net profit in the March quarter. The brokerage upgraded the stock to buy on the back of a strong business outlook and capacity expansion with a target price of ₹1,106, indicating an upside of 32 percent.
"Consistent growth in its order book and robust demand for 2- and 4- wheelers led to Minda Industries’ strong revenue. The recent commissioning of assembly lines for alloy wheels on further orders augurs well for its growth. Supply constraints are expected to normalise in ensuing quarters; accordingly, we expect strong demand from 2- and 4-Wheelers," Anand Rathi pointed out.
The company posted a 5 percent decline in its consolidated profit after tax at ₹156 crore in the fourth quarter ended March versus ₹164 crore in the same period of the previous fiscal. However, its consolidated revenue from operations during the quarter under review increased to ₹2,415 crore as compared to ₹2,238 crore in the year-ago period.
The rise in revenue during the quarter was cheered by investors as the stock rose nearly 9 percent in intra-day deals on May 25 to ₹915.75 per share on the BSE post the earnings. It has risen nearly 50 percent in the last 1 year, but is down 25 percent in 2022 YTD.
Despite turbulent times for the auto industry on the back of a shortage of semi-conductors, rising input costs, and geopolitical tensions, the company was able to register growth in its revenues and profitability, UNO Minda Group CMD Nirmal K Minda said, according to a PTI report.
"We believe that the auto industry is at the cusp of a revival, with favorable government policies, with more and more new product launches planned by OEMs for the coming year, we are optimistic of the demand scenario and sentiments improving going forward," he added.
Anand Rathi further highlighted that the Q4FY22 margin expanded 62 bps sequentially to 11.4 percent (10.7 percent in FY22) despite high raw material prices. It expects raw material prices to normalise in subsequent quarters and margins to expand on greater volumes of high-margin products and hence, it estimates margins of 11.1 percent in FY23 and 11.7 percent in FY24 for the firm.
It also forecasted a 22 percent revenue CAGR over FY22-24, and 47 percent in earnings, leading to ₹27.6 EPS.
For financial year FY22, the firm's consolidated PAT came in at ₹413 crore as compared to ₹248 crore in FY21, up 66 percent YoY. Consolidated revenue from operations was the highest ever in FY22 at ₹8,313 crore in FY22 as against ₹6,374 crore in FY21, the company added.
The company also announced that its board has recommended a 50 percent final dividend at the rate of Re 1 per equity share of the face value of ₹2 each, along with an issue of bonus shares in the ratio of 1:1.
Disclaimer: The views and recommendations made above are those of broking companies and not of MintGenie.