Share price of this auto components maker has jumped 18% in the last 5 days

Minda Industries hit a record high of Rs 1,179, rallied 7% in intra-day trade today, surged 37% in past 11 trading days as the company announced a fresh round of capex and investment spends.

Shares of Minda Industries hit a record high of Rs 1,179, on rallying 7 per cent on the BSE in Wednesday’s intra-day trade on healthy outlook. The stock of auto ancillary company was quoting higher for the fifth straight trading day, gaining 18 per cent during the period. Thus far in the calendar year 2021, the stock has zoomed 196 per cent, as compared to 18.9 per cent rise in the S&P BSE Sensex.

In past 11 trading days, the stock has surged 37 per cent, after the company announced a fresh round of capex and investment spends. The auto components maker announced on December 10, 2021 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.

Minda Industries expects surge in two wheel electric vehicles (EV) over next 5-6 years in India. The company 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.

The joint venture will help the company to further strengthen EV product portfolio and accelerate development and manufacturing of various EV components in India to fulfil increasing client requirements and to offer high-quality customized e-solutions in record speed.

Minda will benefit from PLI scheme incentives for its investments in advanced technology components and EV parts. The company is awaiting more details from the government before finalizing investments.

Minda is increasing alloy wheel capacities from 180,000 MT to 280,000 MT by March 2022. It is increasing Bawal plant capacity from 120,000 MT to 180,000 MT and Gujarat plant from 60,000 MT to 100,000 MT. Amid strong demand, further capacity expansions are expected, said analysts at Emkay Global Financial Services in Q2 result update.

The brokerage firm expects growth momentum to continue over FY22-24E with revenue CAGR of 22 per cent, driven by a cyclical upturn in underlying PV/2W segments, higher content in core businesses such as switches, lightings and acoustics, improving presence in alloy wheels, sensors and controllers, and growing content per vehicle led by EV penetration.