Minda Industries at lifetime high on JV news, capacity expansion plans

Minda Industries will hold a majority stake of 50.1 percent in the JV entity.

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The company expects a surge in two-wheeler electric vehicles over the next 5-6 years in India.

While the JV plans to incur a capital expenditure of about Rs 390 crore over a period of the next 6 years to support such growth in India, the outlay in the initial two years would be around Rs 160 crore, the company said. Minda Industries plans to invest Rs 71 crore in one or more tranches as an equity investment to partly fund the above expenditure. The remaining funding requirement will be met through a mix of internal accruals, equity investment and debt, the company added.

The company's board of directors has also approved an investment of Euro 15 million in FRIWO AG through a capital increase in order to strengthen the industrial partnership between the two groups.

The JV will help Minda Industries to further strengthen its EV product portfolio and accelerate development and manufacturing of various EV components in India to fulfil increasing client requirements and to offer high-quality customized e-solutions at record speed.

Market Expert, Prakash Diwan said, "Minda, of course, has got a great track record of new product development, the kind of work that they have done. All this new technology that's coming in, is going to compete with much more established players from China, which we are not adapting, or not bringing in straight away and morphing into our businesses. So it's a little bit of an evolutionary thing not too revolutionary at this point".

"Give it time, you would have companies like Sona Comstar which are in a different league and that is exactly what happens. The first thing that happens is PE rating multiple revision upwards, and that is probably in the short term, but in the long term, the EPS has to start showing, so I would definitely be excited to keep a watch on it but not necessarily jump at it just because of this news of JV with FRIWO AG Germany," Diwan added.

Apart from the JV news, the company's board has approved expansion plans in its alloy wheel businesses considering the increased demand for its alloy wheels from leading original equipment manufacturers.

Minda Industries will be expanding its 2W Alloy wheel capacity by 2.0 Mn wheels per annum at its existing Supa Plant in Maharashtra. The additional capital expenditure for the aforesaid capacity expansion will be Rs 190 crore. The expanded facilities are expected to commence operations by the quarter ending March 2023.

Further, Minda Kosei Aluminum Wheel which is one of the key subsidiaries of Minda Industries, will be expanding its 4W Alloy wheel capacity by 30,000 wheels/month at its plant in Gujarat. Capital expenditure for which will be Rs 74 crore. The expanded facilities are expected to commence operations by the quarter ending June 2023.

At 10 am, shares of Minda Industries were trading 5.4 percent higher at Rs 996.2 on BSE. The stock hit an all-time high at Rs 1,019 today. It has been gaining for the last two days and has risen nearly 10 percent during the period.