Geojit Finance upgrades Minda to 'accumulate'

Mumbai: Geojit Finance Services has upgraded Minda Industries to ‘Accumulate’ with a target price of Rs 388. The brokerage said product diversification of Minda along with increasing growth from new products gives better visibility to the company on revenue front. Further, implementation of BSVI norms and enhanced safety features will lead to increase in Kit value per vehicle across auto segment helping the company. Shares of Minda Industries closed at Rs 348, down 0.7%.

At the current prices, the target implies an upside of 12%. The recommendation comes even as the company’s revenue in FY20 shrunk 10% year on year largely due to 20% decline in the automobile sector. “The further fall in the revenue was arrested by higher contribution from new products which are in ramp up phase. During the quarter new products like censors, controller have grew by 34%,” said the brokerage adding that the margins declined by 50 basis points due to higher fixed cost and lower plant utilization. “Additionally higher depreciation and interest cost further led to -32% decline in PAT(net profit) growth.”