• MIL is engaged in manufacturing and supply of automotive systems to OEMs.
• For fiscal 2019-20, it suffered a setback in the top and bottom lines.
• The company enjoys market preference for its quality products.
• Investors may consider investing in this offer with a long term perspective.
ABOUT COMPANY
Minda Industries Ltd. (MIL) is a manufacturers and suppliers of a variety of automotive systems to OEMs and manufacturers of automotive horns. The company manufactures and supplies automotive components to leading Indian and international OEMs based in India, ASEAN, North America and Europe. It enjoys a market preference for its quality products.
As of March 31, 2020, the Company has 24 Subsidiaries (including one partnership firm), four Associates (including two partnership firms) and nine Joint Ventures. It does not have a holding company.
ISSUE DETAILS:
To part finance its plans for repayment and/or prepayment of all or of a portion of the principal and / or interest of certain borrowings (Rs. 154 cr.), investment in its JV (Joint Venture) Toyoda Gosei Minda India Pvt. Ltd. (Rs. 33.46 cr.) and general corpus funds (Rs. 52.92 cr.), MIL is coming out with a rights issue of 9711739 equity shares of Rs. 2 each at a fixed price of Rs. 250 per share to mobilize Rs. 242.79 cr. It is offering 1 right share against 27 equity shares held as on August 17, 2020. The issue opens for subscription on August 25, 2020, and will close on September 08, 2020. Currently, the promoter's holding in the company is 70.79% (as on June 30, 2020). MIL is likely to spend Rs. 2.41 cr. for this rights issue process.
Scrip turned ex-right on August 14, 2020, at Rs. 283.50 (at the opening) and Rs. 285.20 (at the closing) against its cum right quote of Rs. 290.85 on August 13, 2020(at the close).
The issue is jointly lead managed by Equirus Capital Pvt. Ltd. and Axis Capital Ltd. while Link Intime India Pvt. Ltd. is the registrar to the issue. Post allotment, shares will be listed on BSE and NSE.
Post issue, MIL's current paid-up equity capital of Rs. 52.44 cr. will stand enhanced to Rs. 54.39 cr. Based on its rights issue offer price MIL is looking at a market cap of Rs.6798.22 cr. with expanded equity. At the last traded price of Rs. 285.20 its market cap on fully diluted equity comes to Rs.7755 cr. Scrip has marked last 52 week's high/low of Rs. 423.72/Rs.208.25.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, on a consolidated basis, MIL has posted total revenue/net profits of Rs.4581.64 cr. / Rs. 330.86 cr. (FY18), Rs. 5935.12 cr. / Rs. 339.48 cr. (FY19) and Rs. 5504.39 cr. / Rs. 187.71 cr. (FY20). It suffered a setback in the top and bottom line for the concluded fiscal 2019-20.
The issue is priced at a P/BV of 3.61 based on its NAV (Net Asset Value) of Rs. 69.24 as on March 31, 2020.
Review By Dilip Davda on August 15, 2020
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
