Minda Industries soars 8% on JV with Germany-based FRIWO for EV components

The company has entered into JV with FRIWO AG Germany to manufacture and supply various EV components in the Indian subcontinent with a planned capex of Rs 390 crore in the next six years.

Shares of Minda Industries rallied 8 per cent to Rs 1,019, hitting a new 52-week high on the BSE in Monday's intra-day trade, after the auto anciallary company announced a fresh round of capex and investment spends. The auto components maker announced last Friday that it has entered into a joint venture (JV) agreement with FRIWO AG Germany to manufacture and supply various electric vehicle components in the Indian subcontinent with a planned capex of Rs 390 crore in the next six years.

At 09:25 am, the stock was up 6 per cent at 1,005, as compared to a 0.53-per cent rise in the S&P BSE Sensex. A combined around 650,000 shares had changed hands on the NSE and BSE till the time of writing of this report.

"Minda Industries, the flagship company of UNO Minda Group, and FRIWO AG have entered into a joint venture agreement to combine their manufacturing prowess and technical expertise to manufacture and supply various electric vehicle (EV) components in the Indian Subcontinent. The combined entity will offer full line e-drive-solutions for electrical two-and three wheelers in the Indian subcontinent market, combining extremely robust hardware and an outstanding software architecture," the company said in a press release.

Further, the company expects surge in two wheel electric vehicles over next 5-6 years in India. While joint venture plans to incur capex of around Rs 390 crore over a period of next 6 years to support such growth in India, the outlay in initial two years would be around Rs 160 crore. "Minda Industries Ltd plans to invest Rs 71 crore in one or more tranches as equity investment to partly fund the above expenditure. The remaining funding requirement will be met through mix of internal accruals, equity investment and debt," it said.

The Board has also approved investment of Euro 15 million (Rs 130 crore) in FRIWO AG via a capital increase in order to strengthen the industrial partnership between the two groups, it added.

The company has been at the forefront driving premisisation in the domestic automobile space. Alloy wheel capex is well positioned to capture the increasing consumer preference for the product as well as import substations while JV in the EV components domain will help in substantial improvement in kit value in the electric vehicle. With likely commissioning of new projects over FY23-24E, the company is expected to sustain its outperformance in the domestic automobile space, ICICI Securities said in a note.