Broking firm SBI Securities in its latest pick of the Week report has assigned a ‘Buy’ rating on Mindra Corporation Ltd., a midcap Auto Components & Equipments company.
The brokerage recommends buying the stock of Minda Corp for a target price of Rs 382 per share.
Given the target price, if you buy the stock at the current market price, it can fetch up to 15% potential gains.
The brokerage has listed 5 reasons to buy the stock in the report. These 5 reasons are as follows:
1. Robust EV order book and Smart Key lock sets: The company has lifetime EV order book at 50% of total orders wins in 1QFY24. Total order wins stood at Rs 3,000 cr which includes an order for Rs 750 cr for battery chargers from a leading OEM. Currently, the EV revenue contributed 6% to overall revenue in 1QFY24 vs 2% earlier. Currently, Smart key lock sets account for 15% of total lock set revenue. The company has an order book of Rs 360 cr for smart key lock sets from various OEMs.
2. Margin Outlook: The management has stated a revenue growth guidance of 20-25% over the next 2-3 years on the back of new product development, acquisition of new customers and increase in share of exports. The company expects to increase its current EBITDA margins of 10.7% (1QFY24) to 12-13% on back of improving efficiencies, streamlining of fixed costs and component localization initiatives.
3. Demand Outlook: The management expects that demand will remain moderate during 2QFY24 and is expected to pick up with the beginning of the festive season (3QFY24). It expects the export to recover gradually from 2HYF24. However, the domestic demand for 2Ws will be driven by higher rural income. CV demand too is expected to sustain amid in creasing economic activities.
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