MINDACORPNSENovember 09, 2023

Minda Corporation Limited

7,797words
85turns
10analyst exchanges
3executives
Management on call
Aakash Minda
EXECUTIVE DIRECTOR
Vinod Raheja
GROUP CHIEF FINANCIAL
Pushpa Mani
LEAD INVESTOR RELATIONS – MINDA CORPORATION LIMITED
Key numbers — 40 extracted
7%
momentum trajectory with the highest ever quarterly revenue. The revenue from operations grew by 7% YoY and 11.3% QoQ in Q2FY24. Domestic sales have grown by 10% YoY, and exports have been subdue
11.3%
rajectory with the highest ever quarterly revenue. The revenue from operations grew by 7% YoY and 11.3% QoQ in Q2FY24. Domestic sales have grown by 10% YoY, and exports have been subdued due to geopoli
10%
The revenue from operations grew by 7% YoY and 11.3% QoQ in Q2FY24. Domestic sales have grown by 10% YoY, and exports have been subdued due to geopolitical issues. This is in line with our commitmen
INR 131 crore
with our commitment to outperform the industry. For Minda Corporation, EBITDA for the quarter is INR 131 crores, with EBITDA margin of 11%, registering a growth of 18 basis points year-on-year.
11%
industry. For Minda Corporation, EBITDA for the quarter is INR 131 crores, with EBITDA margin of 11%, registering a growth of 18 basis points year-on-year. Profit b
18 basis point
ion, EBITDA for the quarter is INR 131 crores, with EBITDA margin of 11%, registering a growth of 18 basis points year-on-year. Profit before tax for the quarter is INR 77 cror
INR 77 crore
basis points year-on-year. Profit before tax for the quarter is INR 77 crores, with a PBT margin of 6.4% on account of increased finance cost and depreciation due to investme
6.4%
Profit before tax for the quarter is INR 77 crores, with a PBT margin of 6.4% on account of increased finance cost and depreciation due to investments in capacity expansion an
INR 59 crore
ological upgradation, which would accelerate our growth, going forward. Profit after tax stood at INR 59 crores, with PAT margin of 4.9%. Now, I would like to take you through the key developments during the
4.9%
accelerate our growth, going forward. Profit after tax stood at INR 59 crores, with PAT margin of 4.9%. Now, I would like to take you through the key developments during the quarter. • At first, it
rs,
er advanced products and technologies in the vehicle access space, particularly for passenger cars, increasing the content per vehicle of Minda Corporation Limited. With the changing consumer prefer
5.2%
Corporation. • For the Q2FY24, EV as a percentage of sales to overall group level constitutes 5.2%, which means over 11.2% share in our two-wheeler revenues comes from electric vehicle mobility.
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Guidance — 20 items
Aakash Minda
opening
“Profit before tax for the quarter is INR 77 crores, with a PBT margin of 6.4% on account of increased finance cost and depreciation due to investments in capacity expansion and technological upgradation, which would accelerate our growth, going forward.”
Aakash Minda
opening
“The additional capacities will be utilized to serve the orders that we have already won and also push for new orders.”
Aakash Minda
opening
“Going forward, the road map ahead would be to focus on core products premiumization, growing our share of business in passenger vehicles and focus on technological upgradation via in-house R&D and global strategic tie-ups.”
Aakash Minda
opening
“This joint venture will be signed for the Indian market and catering to the products such as the panoramic and TVS sunroofs as well as closure systems.”
Aakash Minda
opening
“We expect commodity prices further to soften during the quarter and semiconductor supplies continue to ease, especially on the back of effective supplier management, and expect gradual improvement in the coming quarters.”
Aakash Minda
opening
“As you all know, Minda Corporation, all products are EV or engine-agnostic and with the improvement of EV or uptake of EV, Minda Corporation's penetration will be much higher.”
Aakash Minda
opening
“And now, we are going to be working on carbon utility footprint and -- which will be shared maybe in the next quarters to come.”
Aakash Minda
qa
“So we, as following, will be now working to sign up a final joint venture with them in the next few weeks.”
Viraj Kacharia
qa
“And in terms of the product per se, once we set up the capacity, so what kind of capex we will be looking at?”
Aakash Minda
qa
“We expect the capex to be about INR 150 crores or INR 180 crores over the next 3 years' time.”
Risks & concerns — 2 flagged
Exports continue to be under pressure due to geopolitical issues.
— Aakash Minda
We expect commodity prices further to soften during the quarter and semiconductor supplies continue to ease, especially on the back of effective supplier management, and expect gradual improvement in the coming quarters.
— Aakash Minda
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Q&A — 10 exchanges
Q
Just a couple of questions. First is on the sunroof announcement. Can you just provide some more color in terms of the foreign partners, what kind of a global position they have, what kind of relationship they have with OEs in the passenger vehicle space? Any perspective you can give on that?
Aakash Minda
Yes. So at first, we particularly believe that in the Indian market, if you compared to the global market in the automotive segment in pass cars, there's a huge opportunity in India to grow into the sunroof and premium features. So we believe that about 30% of vehicles in India would be having sunroof by 2030 and with a market opportunity of about $500 million to $600 million, is our expectation. With this, we would like to capture the market with a solid partner. So we have shortlisted 1 partner named HCMF from Taiwan. They have more than 29 facilities globally into the sunroof market and oth
Q
Yes. So I just wanted to understand, currently, in India, is sunroof system is also an import substitute product or mainly it is locally produced?
Aakash Minda
So at both ways. It depends on the specifications of the product category. Of course -- I mean, it depends on the technology of the product. I mean high-end solutions are still imported. Of course, the promotion is to have a localized option in India. And that is where we have signed with the opportunity to manufacture them locally in India to be close to the customer and hence, increasing the content per vehicle and vehicle access system solutions offering to our customers. But yes, it depends because the size of the product, it is primarily going to be localized, which already initiatives ha
Q
Congrats for a strong set of numbers in tough time. First question is on the margin side. What was the margin for mechatronics and information connected system in second quarter, sir?
Aakash Minda
So please, pardon me, but from this quarter, we will not be sharing margin details segment wise to save us from competitive intelligence leaking out and this have been advised by our customers. This also falls in line with the industry trend of not sharing margins division wise or product wise. Overall, as I mentioned, we have grown, at a standalone and consolidated levels from 10.8% to 11% EBITDA. Okay. And sir, in wiring harness business, you are looking for the capacity addition. So what would be the incremental revenue from FY '24 because of this capacity addition? And what would be the ma
Q
So I would like to just ask that you mentioned in your presentation that, I think, you have won some orders for smart key to be supplied to some two-wheeler company. Can you just elaborate on it? And how much I just want to know that how much is the increase in content per vehicle for that particular product in smart key? Earlier, what was the price? And now, what is the price? So how much content per vehicle? And is it a meaningful order?
Aakash Minda
Yes, Parag, I think it is a meaningful order from our side of INR 450 crores Lifetime order. So again, as I mentioned, you can divide this by 4, so adding about INR 100 crores in our top line as a new business when it comes to the smart key. As a kit value, a lock-and-key traditional lock- and-key in two-wheelers typically used to be about INR 300 to INR 400 or INR 400 to INR 500. Now with the smart key solution, it is going to about INR 2,500 to INR 5,000, depending on the configuration of the product, which could have 1 fob or 2 fob or phone as a key, different level of securities coming int
Q
Sir somebody -- the previous participant asked a question about the realizations for smart locks. So you mentioned around 3,000. So sir, actually, on your website, I've seen for the locks, we are supplying to Activas 6G, wherein you mentioned the product price is INR 1,150. So would this be categorized as smart lock? Or what kind of lock is this?
Aakash Minda
I'm sorry, your voice is not clear. Are you saying that the Honda smart key is which category? Is that the question? Yes, sir. And the product price of which is INR1,150. No, I'm sorry, I did not know where you have taken these numbers from. But what I can only comment is that the smart key is a combination of multiple technologies and multiple products. So it could vary from our system to system, as I mentioned. And sir, when we are starting from FY '24, if I'm correct, the production of smart keys? No, ma'am. Our smart keys have been in the production for the last 3 to 4 years for domestic a
Q
Congrats for a good set of numbers. I have a couple of questions regarding first question regarding the growth. If you see last 2, 3 quarters, our growth rate has been muted compared to what we have seen at the back and we have always been committed to have a good delta over the industry volume growth. So compared to industry volume two-wheelers, which has grown by QoQ around 12% to 13%, our two-wheeler, 3-wheeler business has grown by around 7 odd percent on a QoQ basis. Similarly, that is the case with the pass car industry passenger car production vis-a-vis our pass car business as well. So
Aakash Minda
Yes. So of course, multiple factors, and its gradual increase because once you win the order, it takes about 18 to 24 months for the products to come in to start up production. And then again, another about 6 to 8 months for ramping up the production. That's point number one. Compared to last year, if you look at quarter 2 versus quarter 2, our premium buying last year was up to about INR30 crores, as we have already mentioned. And if I normalize that, then of course, our growth rate is higher. Number three, our if you look at the domestic market, we have grown by 10% year-on-year, whereas the
Q
So my first question is regarding the sunroof. If you can just throw some light on the capabilities of this JV, is it more on the TVS sunroof or panoramic sunroof, how is the product profile for this partner, globally?. And what are the I mean, I understand you will not be able to give a flavor on the customer. But whom are they predominantly strong with, is it the European customer, South Korean customers, Japanese customers? Any flavor on that because that could also help you in having relationships, from an Indian context, with those OEMs?
Aakash Minda
Yes. So to answer your question, this company, as I mentioned, is making about 2 billion sunroofs annually. Second is that they are partners to European OEMs, Japanese OEM and local OEMs across China and Mexico as well as Europe. Third, they are making sunroof particularly all top loaded, bottom loaded, TVS, panoramic is in that product portfolio. And last, not the least, I would like to add that we are, of course, also engaging for other products, which are closure systems for the four-wheeler vehicle access, which are almost to the similar kit value that they offer. Understood. And these oth
Q
Congratulations on great numbers. I wanted to ask what is the split of premium and value products in terms of revenue? And what is the margin guidance for future for them?
Aakash Minda
So sorry, if I understand your question, you're asking that what is the value for the legacy products versus the new technology products? Premium and value products, the split of premium, basically. Sorry, ma'am, that's a very vast question. But just to tell you, we do categorize all of our different products and different buckets. So there will not be uniform answer to -- because, for example, if I look at the keyless solutions as one traditional offset and then one is keyless solutions; so If I look at the wiring harness, there is this simple wiring harnesses versus now the electric vehicle
Q
Sir, my question is on the loan side that we have given to JV, INR400 crores, as per the cash flow statement, if you can throw some light on that?
Aakash Minda
Sorry, can you repeat the question, please? There is a INR 400 crores loan given to a JV, as per cash flow statement. If you can throw some light on that? So, it's not INR 400 crores, it is INR 4 crores given to one of the JV companies. Okay. Sorry. Yes. It is INR 400 lakhs, I mean. Okay. Okay. Then it's fine. And also, sir, second question on the export front, like it is a subdued from last 2 quarters. So if you can give some outlook, going forward? Yes, ma'am, exports definitely continues to be the focus for the group. We continue to build order book from the export customers, which are glob
Q
Yes. Thank you. So thanks a lot, once again, for everybody to join the call. We at Minda Corporation remain focused on enhancing our core and deepening our capabilities across product portfolio, with a special focus on EV and electronics. Our strategic approach will remain on fortifying our core products and expanding our products and customer base both by attracting new clients and deepening our relationships with existing ones. We are fully poised and confident of margin-accretive growth in the coming quarters. So thank you very much for joining. And please, have a great festive season.
Management
Speaking time
Aakash Minda
36
Moderator
12
Parag Thakkar
6
Shridhar Kallani
5
Radha
5
Viraj Kacharia
4
Jyoti Singh
4
Abhishek
3
Vishal
3
Jay Kale
3
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Opening remarks
Mayur Milak
On behalf of Asian Market Securities, we welcome you all to the 2Q FY '24 Post Earnings Conference Call of Minda Corp. I take this opportunity to welcome the senior management team of Minda Corp. We have with us today Mr. Aakash Minda, Executive Director; Mr. Vinod Raheja, Group CFO; and Ms. Pushpa Mani, Lead Investor Relations. I will now invite Mr. Aakash Minda: for his opening remarks, to be followed by a Q&A session. Over to you, Aakash.
Aakash Minda
Thank you, Mayur. And I thanks Asian Market Securities for hosting the call for Minda Corporation for quarter Q2FY24. Good evening, everyone, and welcome to the Q2FY24 Earnings conference call of Minda Corporation. On behalf of the company, I thank you all for joining us on this conference call, and I hope you all are keeping safe and healthy. During the quarter, the auto industry saw a sequential uptick in demand across segment, mainly fuelled by improved consumer sentiment and increased demand on the back of festive season, two-wheeler, and passenger vehicle demand, mainly driven by new product launches and growing preference for SUV-style vehicles. Commercial vehicles are supported by increased spending on infrastructure post monsoon recession, while tractor demand remains subdued due to excess monsoon in key western and central markets. Exports continue to be under pressure due to geopolitical issues. Coming to the financial performance, Minda Corporation continued its growth momen
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