Minda Corporation Limited Q4 FY23 Earnings Conference Call Insights

Key highlights from Minda Corporation Limited (MINDACORP) Q4 FY23 Earnings Concall

Management Update:

• [00:02:14] MINDACORP said that in FY23, the overall industry experienced double-digit growth across vehicle segments, except the company’s two-wheeler segment.

• [00:05:25] MINDACORP’s order book remains robust, aiming for 20-25% YonY growth over the next 2-3 years.

Q&A Highlights:

• [00:21:25] Abhishek Jain of Dolat Capital asked how the company is foreseeing the growth and margin guidance in the wiring harness business. Aakash Minda, ED Finance said wiring harness content is expected to grow in line with or even better than the industry growth due to more premiumization and connected systems in electric vehicles.

• [00:22:48] Abhishek Jain of Dolat Capital also enquired if the wiring harness business be able to achieve double-digit margins as semiconductor prices decline. Aakash Minda, ED Finance replied that semiconductors are mainly associated with the electronics business, encompassing clusters, sensors, keyless solutions, and electric vehicle mobility, whereas investment in semiconductors for wiring harness is more concentrated in other product lines.

• [00:23:24] Abhishek Jain of Dolat Capital asked about the mix in FY23 for wiring harness business. Aakash Minda ED Finance said the revenue segmentation largely aligns with the overall group distribution, with approx. 50% from two-wheelers, 25-30% from commercial vehicles, and the remaining portion from off-road and other segments.

• [00:26:15] Radha at B&K Securities enquired about the current penetration of smart locks in the industry, and how it’s expected to evolve in the next 3-4 years. Aakash Minda ED Finance answered that the current penetration of smart access solutions in India is about 5-7%. However, the penetration is much higher in the premium and electric vehicle segments than in the lower-end and commuter segments.

• [00:29:36] Dhananjay Mishra asked if MINDACORP has reached the target kit value of INR8,000-10,000 for any EV customer. Aakash Minda ED Finance replied that currently, MINDACORP has achieved a kit value range of approx. INR10,000-12,000, which is under mass production, while the maximum potential kit value that the company can offer is INR8,000-10,000.

• [00:31:06] Dhananjay Mishra enquired about the total capex for FY23, and if it was for maintenance or new project. Aakash Minda ED Finance said that for FY23 the capex was INR250 crores, with 2-2.5% in engineering and R&D, about 1-1.5% in regular and maintenance, 1-2% in plant upgradation.

• [00:34:27] Mihir Desai from Pendulum asked how the global market landscape has impacted MINDACORP’s performance. Aakash Minda ED Finance clarified that MINDACORP remains focused on securing new orders and growth opportunities in India despite challenges in export markets such as America and Europe.

• [00:35:16] Mihir Desai from Pendulum enquired what steps are being taken to address supply chain challenges and disruptions. Aakash Minda ED Finance replied that MINDACORP is working to mitigate the effects of commodity inflation and China Plus One by working with suppliers to localize components and improve quality, cost, and competitiveness.

• [00:38:56] Mihir Desai from Pendulum asked about the strategy of the company and the path forward 5 years down the line. Aakash Minda ED Finance said that MINDACORP aims to transition from component suppliers to complete system solutions, achieve operational excellence and cost leadership, and outperform the market while sustaining consistent growth.

• [00:42:05] Harish Shah with HS Investments asked about any update on the strengthening of international and global presence. Aakash Minda ED Finance replied that MINDACORP’s focus is on increasing exports and expanding in India, with no plans to acquire companies with significant overseas operations.

• [00:43:03] Harish Shah with HS Investments asked about margin panning out in the Mechatronics division. Aakash Minda ED Finance said MINDACORP’s priority for the mechatronics division is to stabilize EBITDA, utilize capacities, meet customer demand and deliver effectively. Once stabilized, the company will work on improving it YonY.

• [00:48:42] Saral Seth from Indsec Securities asked about levers for margins going ahead. Aakash Minda ED Finance replied that despite pressures from RM and wage increases, the organization aims to gain cost leadership by enhancing manufacturing efficiency, partnering with suppliers, increasing productivity through automation and robotics, and developing products that rely less on manual labor.

• [00:54:19] Rajesh Kumar from Reliance Wealth enquired how MINDACORP expects its working capital days to evolve. Aakash Minda ED Finance answered that to address the challenge of increasing working capital in the automotive industry, MINDACORP is strategizing with suppliers to decrease inventory and payment terms, managing inventory, and engaging with customers to reduce receivable days with the aim of reducing working capital days.