• Mayank Mehraa CFA, FRM

Minda Industries - Dominant Nichè Auto Player

Updated: Dec 9, 2018


We discuss our pick of Minda Industries, which has established itself as India’s largest Switch Player diversified across the 2wheeler (2w) and 4 wheeler (4w) segments No. 1 in Horns in India and 2nd largest Horns player globally and India’s 3rd largest automotive Lighting player, post-acquisition of Rinder Group.

Please note that we have been actively buying and recommending to our clients the same stock since pre Rs. 100 levels and this post should not be confused with a stock pitch or recommendation.


Read our original post here


Global Partnerships Creating Synergies


Timeline of JVs and Association (excerpt from investor presentation made by the company)
Acquisition Synergies

Minda Industries has escalated to a global player in the niche segments of Car Horns post its acquisition of of Clarton Horns being the 2nd largest (by revenue).

Minda Industries went ahead to acquire Rinder Group making it the 3rd largest automotive lighting player and has organically grown to become India's largest player in automotive switches.

Minda has recently acquired the Munich Based i-Sys which specialises in

  1. Tailgate ECU

  2. Infotainment System (Car Panel/ Car Play)

  3. Ambient and Mood Lighting

Minda Industries has entered the premium luxury car segment in Europe owing the the clientele of Rinder Group (Namely ~ Rolls Royce, BMW etc) also Rinder Group is leading automotive LED lights in the 2 wheeler markets with major clients like BAJAJ, HERO, KTM and YAMAHA.

The Way Ahead

Given the recent scenarios where automotive industry is looking forward to the industry wide disruptions from the wave of EVs, we strongly believe Minda Industries has a niche market whose revenues are deemed to steadily grow given the sudden craze in IoTs and Infotainment systems added with Alloy Wheels..

The Company don't pose any real threat from the industry disruptions instead EV should open a newer market, one more focussed to Minda's Technological Edge.

Minda has completed 90% consolidation and its targeting to reach a 100% in the years to come.

Setting up of CREAT for Advanced research engineering and advanced technologies focused to capture
  1. Cockpit Electronics

  2. Body Exterior & advanced Lighting

  3. Air Bags & Seat belts

  4. Controllers and Sensors

  5. EV technologies

India has one of the lowest passenger vehicle penetration of around 32 vehicles per 1,000 people, thus making it one of the world’s most attractive auto markets. with the Government’s emphasis on ‘Make in india’ combined with global oeMs increasing preference to leverage india’s manufacturing skills to set up export- oriented production hubs.

A look at the Digits

Minda receives 81% of its revenue from 50 OEMs across the globe and in both 2 and 4 wheeler segments and off road segments. 3+ percentage of revenues are used towards Research across 50 RnD plants of the company across the globe. Minda has 192+ Registered Designs and 180+ Patents Filed for.

June Quarter FY 18 vs FY 19 Revenue Mix-

  1. Switches saw an increase from 30 % in FY 18 to 43 % in FY 19.

  2. Lighting saw a decrease from 26 % in FY 18 to 13 % in FY 19.

  3. Acoustics saw a decrease from 20 % in FY 18 to 10 % in FY 19.

  4. Others saw an increase from 24 % in FY 18 to 35 % in FY 19

5 year historic

  1. ROE at 22.70 % Avg

  2. Compounded Profit Growth at 61.87 %

  3. Compounded Sales Growth at 27.24%.

We maintain our positive outlook on the company at its current valuations, however the volatility and risk return characteristics of each investor with respect to the company may vary.

However, Minda has maintained a higher than industry average PE in recent times our research desk strongly believes low leverage and high growth along with the market leadership of Minda seem reasonable for such premiums..

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