Minda Industries targets 20-25% market share in airbag biz; looking to stabilise margin at 11-12%

Minda Industries Ltd came out with its Q3 earnings. The company reported a 13 percent fall in its profit after tax (PAT) to Rs 118 crore for the December 2021 quarter. The company had posted a PAT of Rs 137 crore in the corresponding quarter of last year.

Revenue from operations during the October-December period rose 7 percent to Rs 2,181 crore, compared with Rs 2,031 crore in the year-ago period. Its EBITDA (earnings before interest, taxes, depreciation and amortisation) saw a de-growth of 16 percent to Rs 235 crore as compared with Rs 279 crore in the year-ago period.

In an interview with CNBC-TV18, Sunil Bohra, Group CFO, Minda Industries, discussed the company’s recent performance and outlook.

First up, Bohra said that the company plans to stabilise its margin at around 11-12 percent. Further, he mentioned that the company will need stable commodity prices for at least two quarters to drive higher margin. Elaborating on inputs costs, he explained that raw material prices in Q3 were higher than in Q2. He also added that the company has been able to pass on commodity price increases to some of its customers.

"We have been able to pass on the impact of commodity price increases. The commodity prices continue to stay high. In fact, in Q3, the prices were even higher than Q2. To have a stable margin, we will need to have at least two quarters of stable commodity prices. We are working to see 11-12 percent kind of range for margin, we should be able to stabilize in a normal kind of scenario, going forward," he said.

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On passenger vehicle (PV) volumes, he expects it to be higher in Q4 when compared to Q3. He also shared that the company is targeting a market share of 20-25 percent in the airbag business from the current 14-15 percent levels.

He said, "In other segments like passenger vehicles (PV), things are looking much better than what they were. In fact, in Q4, we are expecting PV volumes to be even higher than Q3."

"In terms of airbags, yes, this is the big move by the government - straightaway going from two airbags to six airbags. Currently our share of business is roughly around 15 percent and going forward, once this entire six airbag norm is implemented, we are targeting almost 20-25 percent kind of share of business for this incremental revenue potential of Rs 3,000 crore," he added.

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On electric vehicle (EV) components, Bohra mentioned that they are very bullish. He added that they are getting significant new business from EV customers. Sharing details about the revenue from the EV segment, he explained that it should be more than Rs 1,500 crore in 4 years. Additionally, he said that new EV orders are annualised at Rs 400 crore during peak production.

He said, "We are very bullish on EV components. The kind of product profile we have built, it's unmatchable in the domestic industry. We have been adding significant new business from all the EV players including new-age EV players."

"In the last quarter alone, we added almost Rs 400 crore worth of per annum business which will come into FY24-FY25. We are expecting the two-wheeler and three-wheeler EV volumes to be in almost 20-30 percent kind of range in the next four to five years; if that be so, we should easily be able to achieve Rs 1,500-2,000 crore of revenue," he said.