Minda Industries entered into a JV with FRIWO to combine their manufacturing and technical expertise to manufacture and supply various electric vehicle components for 2Ws and 3Ws in Indian markets. The JV will help MNDA accelerate EV product launches and provide a wide range of offerings to 2W OEMs. The company is well-positioned to benefit from – (i) premiumisation leading to increase in content per vehicle, (ii) import substitution (alloy wheels) and increase in localisation of electronic components (sensors) and (iii) rapid adoption of EV technology in 2Ws. Given superior growth opportunities, MNDA remains our top pick in the auto ancillary space.
Minda Industries forms JV with FRIWO: This JV will help the company offer newer product additions such as battery packs and off board chargers (FRIWO already has anchor customers for these products in India) as well as accelerate the product development for motor controller. The entity will offer full line e-drive solutions for electrical two-and three wheelers in the domestic market. The total capex to be incurred by the proposed JV will be Rs 3.9 bn over the next six years, out of which Rs 1.6 bn will be invested over the next two years.
JV will further accelerate 2W EV initiatives for MNDA: The company has commenced the production of EV-specific products for 2W OEMs. Furthermore, the JV will aid the company to accelerate product development timeline as well as increase the kit value offering to 2W OEMs with new products.
Minda well-positioned: We have fine-tuned our FY2022-24e EPS estimates. We expect MNDA to continue to outperform industry. Maintain Buy with revised FV of Rs 1,130 (from Rs 950 earlier) based on DCF methodology as we have increased long-term growth rate assumptions for the company and roll over to March 2024e.