MINDACORPNSEJanuary 21, 2025

Minda Corporation Limited

7,181words
79turns
11analyst exchanges
3executives
Management on call
Aakash Minda
EXECUTIVE DIRECTOR
Vinod Raheja
GROUP CFO
Nitesh Jain
LEAD INVESTOR RELATIONS
Key numbers — 40 extracted
INR 1,500 crore
to its stakeholders. Flash Electronics is expected to achieve revenue over INR 1,500 crores in FY25. And has been impressively delivering a CAGR of over 17% during the past years. The
17%
ieve revenue over INR 1,500 crores in FY25. And has been impressively delivering a CAGR of over 17% during the past years. The company is expected to deliver EBITDA margin of around 14% with a stea
14%
AGR of over 17% during the past years. The company is expected to deliver EBITDA margin of around 14% with a steady ROCE of over 22%. As part of the partnership, Minda Corporation will acquire a 49%
22%
ears. The company is expected to deliver EBITDA margin of around 14% with a steady ROCE of over 22%. As part of the partnership, Minda Corporation will acquire a 49% equity stake in Flash Electroni
49%
14% with a steady ROCE of over 22%. As part of the partnership, Minda Corporation will acquire a 49% equity stake in Flash Electronics and its subsidiaries for a cash consideration of INR 1,372 cr
INR 1,372 crore
acquire a 49% equity stake in Flash Electronics and its subsidiaries for a cash consideration of INR 1,372 crores. Minda Corporation has a lot of opportunities as per our current business plan in our organic
25%
neutral report, which is by ICRA, where we can see EV 2-wheelers are expected to contribute about 25% of the volume by 2030. 3- wheelers about 40%, e-buses about 30%, LCVs about 20% and passenger vehi
40%
see EV 2-wheelers are expected to contribute about 25% of the volume by 2030. 3- wheelers about 40%, e-buses about 30%, LCVs about 20% and passenger vehicles by about 15%. We wish to harness and ca
30%
s are expected to contribute about 25% of the volume by 2030. 3- wheelers about 40%, e-buses about 30%, LCVs about 20% and passenger vehicles by about 15%. We wish to harness and capture the growing m
20%
o contribute about 25% of the volume by 2030. 3- wheelers about 40%, e-buses about 30%, LCVs about 20% and passenger vehicles by about 15%. We wish to harness and capture the growing market in ICE and
15%
y 2030. 3- wheelers about 40%, e-buses about 30%, LCVs about 20% and passenger vehicles by about 15%. We wish to harness and capture the growing market in ICE and EV market going forward. Moving o
INR 1,590 crore
I would like to share a quick glance about Flash Electronics. The FY25 expected revenue is about INR 1,590 crores with the CAGR revenue of about 17% over the last 5 years. They have eight manufacturing plants,
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Guidance — 20 items
Aakash Minda
opening
“Flash Electronics is expected to achieve revenue over INR 1,500 crores in FY25.”
Aakash Minda
opening
“And has been impressively delivering a CAGR of over 17% during the past years.”
Aakash Minda
opening
“Minda and Flash will be leveraging each other's strength and driving future growth by unlocking synergies across products, technologies and customers.”
Aakash Minda
opening
“As the electric vehicle mobility is the fastest-growing opportunity, we would like to harness this opportunity going forward.”
Aakash Minda
opening
“We wish to harness and capture the growing market in ICE and EV market going forward.”
Aakash Minda
opening
“The FY25 expected revenue is about INR 1,590 crores with the CAGR revenue of about 17% over the last 5 years.”
Aakash Minda
opening
“More importantly, the customers marked in green are new customer additions for Minda Corporation, where we will be able to harness our opportunities and cross-sell products.”
Aakash Minda
opening
“On the right side, you can see how Flash Electronics has grown from INR 840 crores to about INR 1,500 plus crores by end of this financial year and in the first half of the year, they have already achieved INR 772 crores delivering a CAGR of about 17% plus.”
Aakash Minda
opening
“I'm happy to share in first half of FY25, EV revenue now constitutes to about 20%, doubling from the last year.”
Aakash Minda
opening
“Now combined offering kit value will be to the tune of about INR 11,000 to INR 12,000.”
Q&A — 11 exchanges
Q
Congratulations, and I should say that in last call, you committed that whatever acquisition you did, you will do will be EPS accretive and ROCE accretive. And I'm very happy to see that you have done exactly that. Because I think Minda Corp. is right now trading at say EBITDA multiple of around 20x, while this company is going to come at EBITDA multiple of around 13x.
Parag Thakkar
And as you said, it is also having a 22% ROCE. So definitely, it will be both ROCE and EPS accretive. Plus, of course, it will add a lot of strategies in terms of exports and penetrating more into or gaining more wallet share of the same customer as you rightly explained. So I would just like to know that whether it will remain at 49% or you will further increase the stake? And what are the plans out there? Yes, thank you Parag for your comments and strengthening and giving confidence to us. We strongly believe future is the era of collaboration and partnerships. Working together, we believe,
Q
So yes, in your comments, you said one line that Flash is probably making some supplies where that there is an overlap of components or raw materials that they use. Could you expand on that, right? I mean there is a fair bit of overlap perhaps. And are there some gains that you perceive that could lead to margin expansion for Flash?
Aakash Minda
Yes. Thank you very much, Nilesh. So as I mentioned, Minda Corporation is into the product lines of body electronics, which is vehicle access, electrical distribution system. Third is the driver information system, die casting products and EV products and electronics like telematics and etc. Flash is in the area of ignition and EV powertrain. So, while going forward, Flash has a lot of captive consumption, primarily in the three areas, which they outsource currently from the perspective of die casting parts, wiring harness parts as well as electronics. So as per our business plan supply these
Q
Sir, firstly, on EV, for Flash, FY25 revenue can exceed INR 300 crores given the 20% EV contribution. Can you talk about how we are looking at the future potential or any targets you can share? And relating to that, would there be any pending order book for Flash in EV parts? And Flash also has a presence in terms of EV parts for 4-wheeler and commercial vehicle. In this category, how much would be the current revenues? and how do you see the potential?
Aakash Minda
Raghu, I think there are multiple questions, I'll try and address them one by one. So the first question is with respect to the 2-wheeler product lines and the plan going forward. So as you know that electric vehicle industry is one of the fastest-growing industries in the automotive space in India, which are outperforming the overall industry. So that is expected to be in the 2-wheeler side and as well as shown in my slide that in 2030, 2-wheeler is expected to be about 25%, and the 3-wheeler is expected to be in the range of about 40% and similarly, buses are 30%, LCVs are 20% and passenger
Q
My first question was in relation to competitive positioning of Flash within EVs. Where do they stand versus the market in terms of the product profile that they have? And as a combined entity, you mentioned that you would be the fastest-growing player in the EV space. But how large would the combined entity be within the overall EV 2- wheeler space after the acquisition is complete?
Aakash Minda
Yes. So the EV market itself is very nascent in India and as per the current data latest from December, the EV in 2-wheeler constitutes to about only 5% of the overall volumes. So, by end of the year, it is still expected to be about 5% of the total 2-wheeler space. In space in the product lines where the Flash Electronics operates, they are supplying to one of the largest or the top three OEMs in India, which is manufacturing EV and have more than 20% market share. This is expected to further increase where both the synergies are going to come from both the organization by adding more custome
Q
First is what would be the PAT number of the company because you have shared EBITDA, ROCE, but PAT number was not shared. So what could be the PAT margins of this business? That's one.
Aakash Minda
Which is more relevant for us, by end of FY26, which is where the accounting of Minda Corporation will happen, that is into the range of about INR 110 crores as PAT. INR 110 crores of PAT. That is helpful. Second is, are your customer profile complementary in nature or they're completely different. So you may be with X and they may be with Y? Or is it that both of you supply to the same customer, but different products or how it is? So I have shared this in our slide number 5, which shows the customers of Flash Electronics. Of course, there are many common customers, but there are many new cus
Q
I just have a simple question. Sir, what will be the composition of Board of Directors post this acquisition? And how many directors will Minda be appointing in Flash Electronics?
Aakash Minda
So, the Board composition will have five directors, two from the Flash Electronics and two from Minda, and the CFO, which is the current Flash CFO. And sir, you are doing all cash transaction, what is the approximate goodwill value that will be shown on our balance sheet because of this transaction? So, Sridhar, we will continue to give further details when we grow, but the company has been established for the last 35 years and with the products that they have established and the customer base that they have established, I think that's a testimony of the goodwill that they have generated over
Q
Sir, my question was pertaining to synergies, which have been asked previously as well. Is there any customer with Flash in domestic bucket where we can really leverage our product basket and look to cross-sell with Flash's customer profile and our products. So just trying to understand synergy in detail. That's my first question. And my second question is we already had a previous learning with Volkswagen, which we had. So any learnings from that, which we would like to incorporate in the present scheme of things and look for a good growth in the European market and probably look to add a few
Aakash Minda
Yes. So, Saral, when it comes to synergies, I think we've already shared. But yes, there are more customers which are overseas and now planning to come to India, which are already customers of Flash. So while those customers look at setting up facilities in India, Flash and Minda will become, hopefully the primary supplier base for them. That's one. Number two, yes, there are customers in India, which are already customers from Minda Corporation, but offering a complete kit value and complete system solution is the value accretion as well as the offering that the companies will be offering as
Q
I just had one question that if I'm not wrong in 2019 Flash Electronics had filed a case against Royal Enfield for some infringement. Where are we in that? Has it been settled? And how do they have Royal Enfield still in their customer mix? And how does that equation be with we coming in?
Aakash Minda
So Jay, as we have signed the agreements and we are under NDA, so we cannot share these public confidential documents or confidential discussions online, but more than happy to share that all the agreements or any kind of liabilities that are there in the current scheme of things will not be passed on. But yes, now as a partner, we will all work together on how we can resolve any and all kind of concerns that persists with either of the organizations, and we will conclude the matter amicably with any and all customers. Sure. And also, second question is on your based on our strategy, now going
Q
Sir, on the customer side, can you indicate what would be the share of the top 5 customers? Is it fair to assume this will be mainly two-wheeler companies? And the largest customer seems to be Bajaj Auto. Can you indicate their share?
Aakash Minda
So Raghu, yes, in our slide number 6, we've also shown that two-wheeler revenue is about 75%. And yes, which is in India and as well as overseas majority portfolio comes from two-wheelers and three-wheelers. I will not be able to disclose the name of the largest customer. But yes, they are one of the top three 2-wheeler manufacturers in the country, whether ICE or EV. And in terms of Flash capacity utilization and capex expectations in the near term, if you can throw some light? So Flash has different capacities across their product lines. So for the EV product lines, they have recently set up
Q
So do we further see M&A opportunity? Or would we be actively looking at further opportunities from the M&A side for the next 2-3 years? Or we are recently well placed considering the organic growth plans that we have in the recent partnership with this Flash?
Aakash Minda
So Chirag, we will go step by step and I think this is a very big moment for all of us. I think we need to first deliver on our growth plans organically, both the organizations. So in terms of our expansions, partnership, new product launches that are upcoming for both the organizations as well as Minda Corporation. So the first order is to execute and deliver that and give customer delight and create value and then we will continue to explore further collaborations and opportunities. So we are open to keep looking for new technology partnerships, which we continuously invest and we will do so
Q
So once again, good afternoon, and good evening, everybody, and thank you very much for joining the call. We will keep updating the investor community and all of you on a regular basis for incremental updates on the company. I hope we were able to address all your queries and for any other questions and queries, I request to please get in touch with our Investor Relations team. In the end, I would like to conclude by saying that this historic strategic partnership is in line with our long-term vision and business strategy, and it will combine the strength of both the organization, leveraging M
Management
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Speaking time
Aakash Minda
33
Moderator
13
Chirag
8
Raghunandhan
7
Parag Thakkar
4
Jaimin Desai
3
Saral Seth
3
Chirag Jain
2
Nilesh Shah
2
Sridhar Kalani
2
Opening remarks
Chirag Jain
Thank you, Steve. Good evening, everyone. On behalf of Emkay Global Financial Services, I would like to congratulate the management team of Minda Corporation for pulling off such a large and strategic partnership with Flash Electronics. To discuss the partnership in detail, today, we have with us from the management team, Mr. Aakash Minda, Executive Director, Mr. Vinod Raheja, Group CFO and Mr. Nitesh Jain, Lead Investor Relations. I'll now hand over the conference call to Mr. Aakash Minda for his opening remarks. and post that, we'll open the floor for Q&A. Over to you, Aakash Ji.
Aakash Minda
Yes. Good afternoon. Thank you very much, Chirag and Emkay Global Financial Services for hosting this call. It's a pleasure to be on the call today and connect with all of you on behalf of Minda Corporation for our business update conference call. I hope all of you are in good health. Today, we are creating history. We are very excited to announce a very important and significant development, which is of a great strategic value to Minda Corporation and its shareholders. Minda Corporation has joined hands with Flash Electronics to create the fastest-growing EV platform in the country. We have been looking out for forming strategic partnerships and we have found a very strong partner in Flash Electronics. The products of both companies are very synergistic, yet they are also different. Minda Corporation is in automotive body electronics, and Flash is in automotive engine and EV powertrain systems. This move aligns with our long-term vision and business strategy. It is designed to offer c
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