Broker’s call: Minda Corp (Buy)

Minda Corporation reported its highest quarterly revenue of ₹1,850 crore in Q1FY27, marking a 33 percent year-over-year increase and an 8 percent quarter-over-quarter rise. This growth was driven by exceptional performance across its core businesses, with Mechatronics & Aftermarket/Information & Connected Systems expanding by 33/34 percent year-over-year.

Key contributors to the revenue growth included wiring harness and instrument clusters, which saw over 30/35 percent increases respectively. EBITDA surged 35 percent year-over-year to ₹210 crore, while the margin stood at 11.5 percent, exceeding the company's estimate of 10.8 percent. This margin improvement, up about 20 basis points year-over-year, was slightly down 45 basis points quarter-over-quarter, primarily due to commodity inflation, higher wage and labor costs, and freight expenses.

However, these challenges were largely offset by operating leverage and efficiencies. Management noted that most indexed commodities have a pass-through arrangement with customers, though with a lag of one to two quarters, which should assist in cost recovery. The company anticipates margins to remain in the 11-12 percent range for FY27, and has reiterated its 12.5 percent EBITDA margin target by FY30.

Minda Corp is considered one of the preferred plays in the ancillary space due to its strong positioning across key automotive trends, such as premiumization, electrification, connected systems, and rising content per vehicle. The company continues to surpass the underlying OEM production growth, bolstered by healthy order inflows, increasing kit value, market-share gains, and expansion into high-growth segments like EV powertrain, TFT clusters, and sunroof systems.

The revised target price of ₹926 is set, valuing Minda Corp at 35 times the Sep '28 earnings per share.