Minda Industries (MIL) Q3FY21 result was above our and consensus estimates on all parameters. Revenue growth for the quarter was 36% YoY/23% QoQ to Rs 18 billion versus 4W/2W industry production growth was 18% each; mainly on account of new customer additions in 4W/2W’s, added new components which has benefitted from BSVI transition and increase in market share from existing customer. EBITDA margin for the quarter stood at 14.7% on account of lower operating expenses and strong operating leverage. Depreciation increased +21% YoY/12% QoQ to Rs 910 million as new plants of alloy wheel/sensor has been commissioned and capitalized during the quarter. Adjusted PAT increased 122% YoY/375 QoQ to Rs 1.3 billion.

Commenting on the result review, the broking firm IDBI Capital said, "We build our FY22/FY23 revenue estimates by 33%/13% respectively factoring the strong growth in FY22 on account of low base of FY21 and Harita seating merger in FY22E. However, we raise EBITDA estimates after factoring the recent cost control initiatives taken by the company and revise our tax estimate to 24% (earlier 33%).

The broking firm expects revenue/earnings to grow at 8%/24% CAGR over FY20-FY23E with EBITDA margin of 13%. "We revise our rating to Accumulate (earlier Hold) with a TP of Rs 585 (earlier Rs 350) based on 15x FY23E EV/EBITDA."

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