Minda Industries breaks 8%, investment opportunity at cheap price, can get 23% return, why experts are bullish

Stock Tips: After the quarterly results, the shares of Minda Industries, a company that makes auto electrical parts and components, had strengthened about 6 percent on Monday. However, today (February 8) its price is showing a decline of about 8 percent due to profit-booking. The company announced the results of October-December 2021 on Monday. Although the results were weak due to rising costs, market experts believe that there is better scope for growth once the chip problem is resolved, which has led to the increase in its target price. Investors can get returns of up to 23 percent by investing at the current price.

Minda’s consolidated revenue grew 7 percent year-on-year and 3 percent quarter-on-quarter to Rs 2180 crore in the December 2021 quarter. Despite lower sales of passenger vehicles and two-wheelers, the company earned more revenue in the December 2021 quarter due to value addition. However, the company’s net profit (profit after tax) declined by 12 per cent year-on-year to Rs 100 crore. However, net profit grew by 7 per cent in October-December 2021 as compared to the September 2021 quarter.

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Experts have fixed a target price of Rs 1250

• Experts of brokerage firm Reliance Securities believe that the production of vehicles will pick up once the chip shortage ends and the company’s growth may see a jump in April-September 2021, the first half of the next financial year.
• Minda’s earnings are expected to increase due to more content on each vehicle, value addition in the name of premium and expansion in high margin segments. Minda has added new EV components like BMS (Battery Management System), On Board Charger and Body Control Module to its product portfolio which will increase its kit value from Rs 4500 to Rs 16500. Apart from this, due to the government making 6 airbags mandatory for large passenger vehicles instead of 2 airbags, its kit value will increase from Rs 3 thousand to Rs 6500.
• The company estimates that its revenue growth will be in double digits in the next 4-5 years. The company’s target is to get 25 percent market share in the next three-four years, which is currently at 14 percent.
• In such a situation, Reliance Securities has increased its target price from Rs 1001 to Rs 1250, keeping its buy rating intact.

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76% return in one year

The company’s sales were affected due to chip shortage, due to which its share price has broken about 13 percent this year. Today on the BSE, it slipped to a price of Rs 1018 in intra-day. However, in the last one year, it has given returns of around 76 per cent to investors. The 52-week record price is Rs 1260. This company manufactures auto electrical parts and components like switches, lighting, batteries. Minda Industries designs, develops and manufactures switches for two wheelers, three wheelers and off-road vehicles.