Minda Corp - Kotak - 07 Dec 2015

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Company Report
Minda Corp. (MDA) BUY
Automobiles
December 07, 2015
INITIATING COVERAGE
Sector view: Attractive
Harness the potential. Minda Corporation is one of the leading suppliers of locksets, Price (`): 89
wiring harness and instrument clusters in the Indian automotive market. Our positive
view on the stock is underpinned by (1) Mindas technology tie-ups with global Target price (`): 110
suppliers that give it access to MNC OEMs, (2) its ability to gain market share across BSE-30: 25,530
segments and (3) robust growth potential from new products such as steering roll
connectors and sensors. We expect 25% EPS CAGR over FY2016-20E and initiate
coverage with a BUY rating; our TP of `110 is based on 15X September 2017E EPS.
Technology tie-ups and strong relationship with OEMs to drive market share gains
Minda Corporation is well-placed to deliver 20% revenue CAGR over the next five years led by INSIDE
(1) market share gains across segments, (2) expansion of product offerings with existing Key technology
customers and (3) new products. We expect Minda Furukawas market share in wiring harness partners and their
to increase to 16% by FY2020 (from 7% currently) led by market share gains with Maruti.
capabilitiespg09
Mindas market share in locksets is likely to increase by 7% over the next five years led by
increase in share with Honda motorcycles and potential new business from Hero MotoCorp.
OEMs and product
New products to provide US$500 mn opportunity for Minda by FY2020E segments that will
drive market share
Airbags will likely become mandatory for passenger vehicles in India by CY2018E; this could
gainspg13
lead to ~US$70 mn market opportunity for steering roll connectors (SRC) by 2020E. This augurs
well for Minda as Furukawa is the global leader for this product. Minda Stoneridge JV is
Potential of new
looking to aggressively expand offering of sensors, which could be a strong revenue driver
over the medium term as automotive sensors could potentially be a US$430 mn industry productspg15
opportunity in India by FY2020E, as per our calculations.
Related-party
Return ratios to improve led by strong profit growth over FY2016-20E transactions and other
We expect consolidated net profit to grow at 25% CAGR over FY2016-20 led by 20% growth issuespg17
in revenues. Due to limited capex requirements and strong operating cash flow, we expect
FCF generation of 1.8 bn over FY2015-18. With this, net debt to equity will likely decline to
0.5X in FY2018E from 1X in FY2015. The companys return ratios are likely to improve over
the next three years. We expect Minda to report RoE/RoCE of 22%/19% in FY2018.
Initiate with BUY rating and target price of `110
The stock is trading at 14.3X FY2017 EPS, which is inexpensive given strong growth prospects Nishit Jalan
nishit.jalan@kotak.com
and improving return ratios. We initiate coverage on Minda Corporation with a BUY rating Mumbai: +91-22-4336-0873
and target price of `110 based on 15X September 2017E EPS. Weak execution, inefficient
capital allocation and break-up with JV partners are the key risks to our investment thesis. Hitesh Goel
hitesh.goel@kotak.com
Mumbai: +91-22-4336-0878
Company data and valuation summary
Company data Stock data High Low Price performance 1M 3M 12M

Rating: BUY 52-week range 105 65 Absolute (%) 19.7 25.3 0.0
Priced at close of: 07-Dec-15 Rel. to BSE-30 (%) 22.9 24.8 0.0
Current price (Rs) Capitalisation Forecasts/valuation 2015 2016E 2017E
89 Market cap (Rs bn) 18.6 EPS (Rs) 4.2 4.4 6.2
Net debt/(cash) (Rs bn) 4.6 P/E (X) 21.2 20.0 14.3 Kotak Institutional Equities
Research
Free float (%) 15.4 RoAE (%) 20.5 18.3 21.5
Shares outstanding (mn) 209 EV/EBITDA (X) 12.5 9.9 7.5
Important disclosures appear
at the back
Source: Company, Kotak Institutional Equities estimates
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Automobiles Minda Corp.
TABLE OF CONTENTS
Minda Corporationfinancial snapshot ..................................................... 3
Valuations: Decent growth story at reasonable valuations .......................... 4
Investment thesis: Revenues to grow at 20% CAGR over next five years .... 8
Key risks: Inefficient capital allocation and weak execution ....................... 17
Financials: Growth led by market share gains ........................................... 19
Appendix 1: Company profile ................................................................... 28
Appendix 2: Product portfolio .................................................................. 34
Appendix 3: Customers across different segments.................................... 35
The prices in this report are based on the market close of December 7, 2015
2 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Minda Corp. Automobiles
MINDA CORPORATIONFINANCIAL SNAPSHOT

Exhibit 1: Consolidated forecasts and valuation, March fiscal year-ends, 2013-20E
Net sales EBITDA PAT EPS EV/EBITDA P/E RoACE RoAE

(Rs mn) (Rs mn) (Rs mn) (Rs) (X) (X) (%) (%)
2013 21,736 1,087 67 0.3 21.5 279.3 2.0 1.9
2014 15,939 1,257 725 3.5 18.7 25.6 10.4 19.7
2015 19,706 1,855 876 4.2 12.5 21.2 12.3 20.5
2016E 25,790 2,393 929 4.4 9.9 20.0 13.7 18.3
2017E 32,821 3,137 1,298 6.2 7.5 14.3 16.7 21.5
2018E 38,660 3,755 1,651 7.9 6.1 11.3 18.8 22.4
2019E 47,102 4,567 1,937 9.3 4.8 9.6 20.7 21.6
2020E 53,314 5,145 2,248 10.7 4.1 8.3 21.6 20.8
Exhibit 2: We expect Minda Corporation to deliver 25% earnings CAGR over FY2016-20E
Minda Corporation, consolidated financial summary, March fiscal year-ends, 2011-20E (` mn)
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Profit model (Rs mn)
Net sales 7,322 13,855 21,736 15,939 19,706 25,790 32,821 38,660 47,102 53,314
EBITDA 758 1,349 1,087 1,257 1,855 2,393 3,137 3,755 4,567 5,145
Other income 40 204 362 304 227 179 189 206 220 235
Interest and finance charges (174) (268) (424) (275) (395) (427) (441) (377) (361) (281)
Depreciation (172) (455) (771) (478) (603) (756) (849) (941) (1,072) (1,213)
Pre-tax profits 452 830 254 808 1,085 1,390 2,035 2,642 3,353 3,884
Extraordinary items (176) (30) 147 24
Income tax (105) (138) (175) (172) (272) (347) (509) (661) (939) (1,088)
Share of JVs 6 10 44
Minority interest (2) 10 14 (114) (228) (331) (478) (549)
Net profits 347 519 60 793 895 929 1,298 1,651 1,937 2,248
Adjusted net profit 347 658 67 725 876 929 1,298 1,651 1,937 2,248
Earnings per share (Rs) 1.8 3.1 0.3 3.5 4.2 4.4 6.2 7.9 9.3 10.7
Balance sheet (Rs mn)
Total equity 2,693 3,530 3,462 3,894 4,666 5,470 6,619 8,093 9,817 11,828
Minority interest 33 51 241 355 583 914 1,391 1,941
Total borrowings 2,046 4,759 5,319 5,523 5,018 6,018 5,518 4,718 4,518 3,518
Current liabilities 2,127 3,211 3,596 3,451 4,022 5,274 6,445 7,587 9,223 10,407
Other liabilities 85 390 301 253 269 269 269 269 269 269
Total liabilities and equity 6,951 11,922 12,729 13,122 14,216 17,386 19,434 21,581 25,218 27,962
Cash 655 972 575 540 441 853 562 341 953 986
Total fixed assets 2,646 4,978 5,342 5,418 5,861 6,555 6,906 7,365 8,292 9,079
Investments 38 189 245 289 289 289 289 289 289
Current assets 3,612 5,580 6,583 6,765 7,423 9,487 11,475 13,385 15,482 17,407
Other long-term assets 203 229 154 202 202 202 202 202 202
Total assets 6,951 11,922 12,729 13,122 14,216 17,386 19,434 21,581 25,218 27,962
Cash flow (Rs mn)
Operating cash flow, excl. working capital 676 1,082 1,295 861 1,427 2,175 2,777 3,280 3,823 4,262
Working capital (66) (1,314) (617) (326) (88) (813) (816) (768) (462) (741)
Capital expenditure/Acquisitions (187) (1,565) (1,150) (321) (455) (1,449) (1,200) (1,400) (2,000) (2,000)
Investments (118) 249
Free cash flow 424 (1,797) (472) 213 884 (88) 760 1,113 1,361 1,521
Ratios (%)
EBITDA margin 10.4 9.7 5.0 7.9 9.4 9.3 9.6 9.7 9.7 9.6
Gross margin 37.3 38.7 39.9 38.9 39.2 37.5 37.0 36.5 36.0 36.0
Debt/equity (X) 0.8 1.3 1.5 1.4 1.1 1.1 0.8 0.6 0.5 0.3
Net debt/equity (X) 0.5 1.1 1.4 1.3 1.0 0.9 0.7 0.5 0.4 0.2
RoAE 20.3 21.2 1.9 19.7 20.5 18.3 21.5 22.4 21.6 20.8
RoACE 13.7 15.4 2.0 10.4 12.3 13.7 16.7 18.8 20.7 21.6
KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

VALUATIONS: DECENT GROWTH STORY AT REASONABLE VALUATIONS

We initiate coverage on Minda Corporation with a BUY rating and target price of 110 based on 15X
September 2017E EPS. We expect Minda to deliver 25% earnings CAGR over FY2016-20E led by (1) market
share gains across both wiring harness and locksets businesses and (2) new product development for existing
customers. The companys return ratios are likely to improve over the next three years. Valuations are
relatively inexpensive at 14.3X FY2017E EPS given decent growth prospects and improvement in RoE.
Minda is trading at 14.3X FY2017E EPS, which is inexpensive given strong growth prospects
and potential improvement in return ratios. We initiate coverage on Minda Corporation with
a BUY rating and target price of `110 based on 15X September 2017E EPS. We note that
smaller auto ancillaries in India (market cap less than US$500 mn) are trading at an average
FY2017E PE multiple of 15.2X (see Exhibit 3). Thus, our target multiple for Minda
Corporation is broadly in line with the average trading multiple of smaller auto ancillaries in
India. Our DCF valuation, which captures the medium-term growth prospects of the
company, implies target price of 110 and PE multiple of 17.7X FY2017E and 13.9X
FY2018E (see Exhibit 4 for details).
We believe that the stock deserves to trade at higher multiples (compared to current levels)
as we expect revenues and PAT to grow at 20% and 25% CAGR respectively over FY2016-
20E. Minda will likely generate strong operating cash flows, which should help further
strengthen its balance sheet with net debt to equity declining to 0.5X by FY2018E from 1X
currently. We expect RoE to improve to 22% by FY2018. In our view, key catalysts that
would drive stock re-rating are (1) strong execution in terms of market share gains in both
wiring harness and locksets, (2) increased focus on cash flow generation and efficient capital
allocation and (3) simplification of group structure.
Historical trading multiples of Minda Corporation are not relevant due to (1) frequent
changes in organization structure over the past five years and (2) listing of the company on
the Bombay Stock Exchange (BSE) only in October 2014; prior to that it was listed in Delhi
Stock Exchange where liquidity in the stock was very low.

Exhibit 3: Minda Corporation trades at 14.3X FY2017E EPS

Valuation table of auto component companies, March fiscal year-ends, 2015-17E
Price Market cap. P/E (X) EV/EBITDA (X)

(Rs) (USD mn) 2015 2016E 2017E 2015 2016E 2017E
Auto ancillaries (Market Cap. >US$2 bn)
Bosch 18,496 8,707 43.4 43.4 34.1 32.1 29.0 23.2
Motherson Sumi Systems 280 5,560 38.3 30.1 23.0 12.6 10.7 8.4
Bharat Forge 831 2,901 25.9 26.1 20.8 14.7 14.1 11.6
MRF 39,220 2,494 10.3 8.8 10.8 6.5 4.9 5.6
Amara raja Batteries 846 2,167 35.1 29.9 26.5 20.1 17.6 15.4
Median 35.1 29.9 23.0 14.7 14.1 11.6
Mean 30.6 27.7 23.1 17.2 15.3 12.8
Auto ancillaries (Market Cap. <US$2 bn but > US$500 mn)
Exide Industries 141 1,797 22.0 19.1 17.8 13.2 11.4 10.5
Wabco India 6,000 1,706 94.3 51.1 34.6 54.9 32.0 21.8
Apollo Tyres 157 1,197 7.2 6.5 6.4 4.2 4.2 4.2
Mahindra CIE Automotive 259 1,254 34.7 25.5 19.6 19.0 13.4 9.8
FAG Bearings India 4,120 1,026 35.2 29.7 24.3 21.3 18.3 15.6
SKF India 1,269 1,003 31.6 27.4 24.4 21.8 18.5 16.1
Balkrishna Industries 649 941 11.1 11.4 9.2 6.8 6.4 5.0
Ceat 1,038 629 13.4 9.9 9.1 6.5 5.3 4.9
Timken India 547 558 41.9 34.6 26.6 26.3 21.9 17.4
Median 31.6 25.5 19.6 19.0 13.4 10.5
Mean 32.4 23.9 19.1 19.3 14.6 11.7
Auto ancillaries (Market Cap. <US$500 mn)
Mayur Uniquoters 428 297 29.1 24.8 20.8 18.2 14.9 12.7
Igarashi Motors India 594 272 38.9 29.2 24.5 20.6 17.0 14.6
Minda Corporation 89 279 21.2 20.0 14.3 12.5 9.9 7.5
Suprajit Engineering 146 263 34.9 27.9 19.7 19.9 14.8 10.7
Ramkrishna Forgings 532 219 20.1 19.4 12.7 20.5 10.9 8.0
NRB Bearings 152 221 27.2 21.5 16.7 13.6 11.9 9.6
Gabriel India 89 191 19.3 16.4 13.7 10.7 10.1 8.6
Minda Industries 868 206 27.2 18.3 12.6 10.1 7.9 6.3
Fiem Industries 704 126 19.9 16.4 12.8 9.3 7.8 6.4
L.G. Balakrishnan & bros 506 119 10.9 13.2 11.1 6.5 6.9 6.1
M.M. Forgings 533 96 12.3 11.9 9.9 6.5 6.4 5.5
Setco Automotive 223 89 17.6 25.2 13.2 12.1 11.1 8.2
Median 20.6 19.7 13.4 12.3 10.5 8.1
Mean 23.2 20.4 15.2 13.4 10.8 8.7
Source: Bloomberg, Kotak Institutional Equities estimates
DCF implies a fair value of `110

Our DCF calculation implies a fair value of `110 for Minda Corporation. Our key
assumptions for DCF are (1) revenue CAGR of 20% over FY2016-20E led by market share
gains and new product launches, (2) moderate revenue growth after FY2020E onwards, (3)
steady EBITDA margin of 9.5% over the long term, (4) terminal growth rate of 4% and (5)
cost of capital of 11.6% based on 13.5% cost of equity, after-tax cost of debt of 7.7% and
debt to capital employed of 35%. Our DCF calculation implies a P/E ratio of 17.7X FY2017E
and 13.9X FY2018E.

Exhibit 4: We value Minda Corporation at 110 on DCF basis

DCF valuation of Minda Corporation, consolidated basis, March fiscal year-ends, 2015-30E ( mn)
2015 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E
Net sales 19,706 25,790 32,821 38,660 47,102 53,314 59,712 66,877 74,902 82,392 90,632 99,695 105,677 112,017 118,738 125,862
YoY (%) 30.9 27.3 17.8 21.8 13.2 12.0 12.0 12.0 10.0 10.0 10.0 6.0 6.0 6.0 6.0
EBITDA 1,855 2,393 3,137 3,755 4,567 5,145 5,673 6,353 7,116 7,827 8,610 9,471 10,039 10,642 11,280 11,957
Margin (%) 9.4 9.3 9.6 9.7 9.7 9.6 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5 9.5
Depreciation 603 756 849 941 1,072 1,213 1,361 1,527 1,693 1,858 2,039 2,239 2,435 2,626 2,806 2,977
EBIT 1,253 1,637 2,288 2,814 3,495 3,931 4,311 4,826 5,422 5,969 6,571 7,232 7,604 8,016 8,474 8,980
Margin (%) 6.4 6.3 7.0 7.3 7.4 7.4 7.2 7.2 7.2 7.2 7.2 7.3 7.2 7.2 7.1 7.1
EBIT (1-tax) 877 1,146 1,601 1,970 2,446 2,752 3,018 3,378 3,796 4,178 4,599 5,063 5,323 5,611 5,932 6,286
Capex (455) (1,449) (1,200) (1,400) (2,000) (2,000) (2,240) (2,509) (2,247) (2,472) (2,719) (2,991) (2,642) (2,800) (2,375) (2,517)
% of revenues 2.3 5.6 3.7 3.6 4.2 3.8 3.8 3.8 3.0 3.0 3.0 3.0 2.5 2.5 2.0 2.0
Change in WC (88) (813) (816) (768) (462) (741) (1,658) (1,039) (1,164) (1,086) (1,195) (1,314) (867) (919) (975) (1,033)
Free cash flow 981 (360) 434 743 1,057 1,225 481 1,358 2,078 2,479 2,725 2,996 4,249 4,517 5,389 5,713
Discounted free cash 704 898 934 329 833 1,144 1,224 1,208 1,191 1,515 1,445 1,547 1,471
After tax cost of debt (%) 7.7

Cost of equity 13.5
Debt/Capital employed (%) 35.1
Equity/Capital employed (%) 64.9
WACC (%) 11.5
Terminal growth (%) 4.0
Discounted free cash flow 14,443
Terminal value 20,499
Enterprise value 34,942
Less: Net debt (Sep. 2017) 4,667
Less: NPV of minority interest 7,685
Equity value 22,590
Equity value per share (Rs) 108
Target price 110
Source: Bloomberg, Kotak Institutional Equities estimates
Key strengths of the company that drive our positive view on the stock
Market leadership in several segments. Minda Corporation is the market leader in

two-wheeler wiring harness and tractor segments with 33% and 41% market share
respectively in FY2015. It is the largest supplier of instrument clusters to commercial
vehicle and tractor OEMs. Further, Minda is one of the top suppliers of locksets to both
two-wheeler and four-wheeler OEMs. In our view, market leadership across several
segments reflects the companys ability to offer consistent and superior product quality at
competitive pricing.
Strong relationship with OEMs offers opportunities to increase content per

vehicle. Minda is the sole supplier of wiring harness to TVS Motors, locksets to Mahindra
two-wheelers and Ford India. Further, it has more than 70-80% business share of (1)
locksets for Bajaj Auto, Yamaha India, Mahindra UVs, etc. and (2) wiring harness for
Mahindra tractors and Ashok Leyland. We believe that strong relationship with OEMs
offers opportunities to expand product offerings and increase content per vehicle. For
example, Minda has received orders to supply brackets & holders from TVS, compressor
housings for Ford and Tata Motors and is also increasing its share in door handles and
door latches with more OEMs.
Strong and reliable technological tie-ups with global suppliers. Minda has
technology tie-ups with strong global players such as Furukawa Electric of Japan for
wiring harness, Stoneridge of USA for instrument clusters and sensors and Vehicle Access
Systems Technology (VAST) for locksets, door handles, latches and other security products.
Apart from superior technology, these tie-ups provide access to OEMs and new innovative
products; we note that due to JV with Furukawa, Minda will gain significant market share
with Maruti and Nissan going ahead.
Diversified customer base leads to lower concentration risk. Unlike several auto
component companies, Minda has a reasonably well-diversified customer base with the
largest customer accounting for 10% of its revenues and top five customers accounting
for just 38% of revenues.

Key catalysts that would drive stock performance
Strong execution. Market share gains in both wiring harness and locksets segments
with steady EBITDA margins would be an important deliverable from the company over
the next few quarters.
Increased focus on cash flow generation & efficient capital allocation. Historically,
the company has made overseas acquisitions and has also allocated capital for plastic
business in India, which in our view, did not augur well for the company. Going ahead,
investors would like to see increased focus on cash flow generation, reduction in debt
levels and efficient capital allocation instead of utilization of cash to make big acquisitions
at aggressive valuations.
Further simplification of corporate structure. We believe that Minda has made

considerable efforts to increase transparency over the past five years by acquiring
companies from the promoter and making it part of the listed entity. However, there is
more scope to further simplify the corporate structure. The company operates through
100% subsidiaries such as Minda Sai and Minda Automotive Solutions. We reckon that
efforts towards merging these businesses with the standalone entity would go a long way
in simplifying corporate structure and instill investor confidence in the stock.
Exhibit 5: Minda Group organizational structure
Minda
Corporation
Minda
Minda KTSN, Minda Sai Minda Automotive Minda Furukawa
Management
Germany (100%) (100%) (100%) Electric (51%)
Services (100%)
Almighty Minda VAST

Minda KTSN, Minda Stoneridge
International PTE, Security Systems
Poland (100%) Instrument Ltd (51%)
Singapore (100%) (50%)
PT Minda
Minda Vietnam
Automotive,
(100%)
Indonesia (100%)
Other Group Companies:
Uz'Minda LLC
(50% by Uzbekistan Overseas Domestic
Government)
Minda Silca Engineering

(29.7% by
Minda Capital)
Source: Company, Kotak Institutional Equities

INVESTMENT THESIS: REVENUES TO GROW AT 20% CAGR OVER NEXT FIVE YEARS
Minda Corporation is one of the largest suppliers of locksets, wiring harness and speedometers in the Indian
automotive market. The company is a market leader across several product segments and has excellent
relationships with OEMs due to its ability to offer consistent and superior quality products. The company has
technological tie-ups with global suppliers, which offer it an edge over domestic peers and also gives access
to MNC OEMs. We believe the companys revenues can grow at 20% CAGR over FY2016-20E led by(1)
market share gains in both wiring harness and locksets segments, (2) expansion of product offerings to
existing customers and (3) new products such as steering roll connectors (SRC) and sensors.
Minda Corporation is well-placed to deliver 20% revenue CAGR over FY2016-20E led by (1)
33% revenue CAGR at Minda Furukawa JV due to market share gains in the wiring harness
segment and increase in market potential for steering roll connectors as airbags become
standard feature in every passenger vehicle in India by CY2018E, (2) market share gains in
the locksets segment due to increased share of business from Honda Motorcycles and (3)
acquisition of 51% stake in Minda Stoneridge JV, which offers strong growth opportunity in
automotive sensors market. We discuss our investment thesis below:
Exhibit 6: We expect Minda to deliver 20% revenue CAGR over FY2016-20E

Revenue break-up across segments, March fiscal year-ends, 2013-20E ( mn)
Revenue CAGR (%)

2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2013-15 2016-20E
Revenues (Rs mn)
Standalone business 5,842 6,039 6,368 6,733 7,975 9,187 10,753 11,828 4.4 15.1
2-wheeler lock kits for OEM 2,399 2,661 3,351 3,965 4,633 5,152 18.0
Locksets for after-market 1,141 1,090 1,282 1,346 1,454 1,570 1,696 1,831 8.0
Die casting (Products sold outside group) 1,008 1,046 1,322 1,619 2,189 2,386 22.9
Exports 662 823 872 872 959 1,055 1,161 1,277
Others 807 807 888 977 1,075 1,182
Minda SAI 3,624 4,413 5,088 5,308 6,054 7,046 8,191 9,306 18.5 15.1
Minda Furukawa 1,848 4,618 6,210 8,152 12,259 14,511 33.1
Minda KTSN 4,048 4,548 4,515 3,838 4,030 4,231 4,231 4,231 5.6 2.5
PT Minda Automotive Indonesia 1,064 798 838 880 924 970 5.0
Minda Vietnam Automotive 255 255 267 281 295 309 5.0
Minda Automotive Soluction (Replacement) 1,642 1,597 1,938 2,054 2,275 2,534 2,760 3,010 8.6 10.0
Minda Schenk 8,368
Minda Stoneridge 1,568 3,730 4,580 5,509 6,594 43.2
Minda VAST 2,200 3,075 3,493 3,986 4,471 19.4
Revenues 23,525 16,794 21,076 27,370 34,453 40,384 48,908 55,230 (5.3) 19.2
Less: Eliminations 2,176 1,152 1,744 1,785 1,893 2,031 2,180 2,339
Other operating income 387 297 375 205 260 307 374 423
Consolidated net revenues 21,736 15,939 19,706 25,790 32,821 38,660 47,102 53,314 (4.8) 19.9
Domestic 8,657 10,568 13,000 20,027 26,726 32,213 40,492 46,526 22.5 23.5
Exports 662 823 872 872 959 1,055 1,161 1,277 14.8 10.0
Overseas entities (Largely Europe) 12,417 4,548 5,834 4,891 5,135 5,392 5,450 5,511 (31.5) 3.0
Revenues by business segment (Rs mn)
Safety security & restraint systems 5,764 6,681 7,913 10,254 12,537 14,343 16,538 18,249 17.2 15.5
Driver information & telematics systems 4,056 4,644 7,116 11,493 15,994 19,778 25,959 30,411 32.5 27.5
Interior systems 11,529 4,317 4,303 3,838 4,030 4,231 4,231 4,231 (38.9) 2.5
Contribution to revenues (%)
Safety security & restraint systems 27 43 41 40 39 37 35 35
Driver information & telematics systems 19 30 37 45 49 52 56 57
Interior systems 54 28 22 15 12 11 9 8
Notes:
(a) 2013-15 revenue CAGR is impacted by sell-off of Minda Schenk.

Technology tie-ups with global suppliers offer edge over domestic peers
Minda Corporation has technology tie-ups with strong global suppliers such as (1) Furukawa
Electric of Japan for wiring harness, (2) Stoneridge of USA for instrument clusters and
sensors and (3) Vehicle Access Systems Technology (VAST) for locksets, door handles, latches
and other security products. Apart from superior technology, we believe that these tie-ups
provide access to OEMs as well as access to innovative products such as steering roll
connectors (SRC). All the JV agreements are open ended and have standard clauses for exit
such as transfer to third party subject to compliance of the agreement.
Exhibit 7: Mindas technology tie-ups with global suppliers are key growth drivers
Key details of technology tie-ups of Minda Corporation
Year of Minda's stake Royalty

Entity incorporation (%) Business segment (%) Growth areas for Minda
(1) Market share gains with Japanese OEMs such as
Passenger vehicle wiring
Minda Furukawa JV 2007 51 3 Maruti and Renault-Nissan and (2) new products like
harness
steering roll connectors
(1) Potential market share gains in two-wheeler

Instrument clusters and
Minda Stoneridge JV 2004 51 2-3 instrument clusters segment and (2) launch of new
automotive sensors
automotive sensors
(1) Access to superior technology for four-wheeler

Four-wheeler locksets locksets and door handles and (2) new products
Minda VAST JV 2015 50 2
and other safety products such as latches and hinges, passive entry passive
start systems, etc.
Notes:
(a) Year of incorporation represents year of original agreement between Minda Group and the JV partner
(b) Minda Furukawa became part of listed entity (Minda Corporation) in Feb. 2014 and Minda Stoneridge in Oct. 2015
Minda Furukawa JVstrong relationship with Japanese OEMs
Furukawa Electric is a Japanese conglomerate engaged in electric and electronics equipment

for different industry segments. The company has developed strong technical capabilities
(R&D spend is 2% of sales) particularly in wires and optic fibers segment. With over US$7 bn
of revenues, Furukawa offers products and services across five segments: (1) optical fiber
cables, electronic appliance wires, etc. for telecom segment, (2) copper wires, aluminum
wires, power transmission cable for energy and industrial segment, (3) wiring harness,
steering roll connectors, electronic component materials, etc. for electronics and automotive
segment, (4) copper and copper alloy products, superconducting products, etc. for metals
segment and (5) logistics, information processing service, software development, etc.
In the automotive segment, with revenues of over US$2 bn, Furukawa has ~3% global
market share in automotive wiring harness with strong relationship with Japanese OEMs.
The company is targeting to increase its market share in wiring harness to 4.5% by 2020.
For steering roll connectors, a component used in air bag system, Furukawa is the market
leader globally. It also manufactures other automotive products such as connectors/terminals,
slide-door harness, metal core PCB for junction boxes, etc.

Exhibit 8: Overview of automotive product offerings of Furukawa Electric
Exhibit 9: Furukawa Electric reported global revenues of more than US$7 bn in FY2015
Electronic and Automotive Systems and total revenues of Furukawa Electric, March fiscal year-ends, 2011-15
(JPY bn)
(JPY bn) Electronics and Automotive Systems Total revenues

1,000
900
800
700
600
500
400
300
200
100
-
2011 2012 2013 2014 2015
Minda Group entered into a joint venture agreement with Furukawa Electric in August 2007
with 51% stake held by Furukawa Electric while Minda Group had the remaining 49%. As
per the agreement, JV was set up to manufacture (1) automotive wiring harness mainly
for Japanese OEMs in India, (2) steering roll connectors used for the airbag system and
(3) other automotive products such as terminals, relay box, junction box, etc. Further,
the JV will have to pay 3% royalty for the sale of products developed based on the
technology of Furukawa Electric. In February, 2014, Minda acquired promoters 49% stake
in the joint venture and then increased it to 51% in October 2014 by acquiring further 2%
stake from Furukawa.

Key potential growth areas for Minda due to this JV are:
Furukawa Electric has 3% market share in wiring harness globally and has strong
relationship with Japanese OEMs particularly Suzuki. Leveraging its strong global
relationship, Minda Furukawa JV has now acquired 7% market share in domestic
passenger vehicle wiring harness segment, market share will likely increase to 16% by
FY020E as JV has received 100% business share for Marutis new launches and Renault
Kwid. For this, JV has set-up two new plants in Chennai and Noida in FY2014-15.
Secondly, Furukawa is the market leader in steering roll connectors (SRC), a component
used in the airbag system. Crash test norms will become mandatory for passenger
vehicles in India by CY2018E, post that, airbags would become a standard feature in
every vehicle. This will lead to a market opportunity of around 4.4 bn for steering roll
connectors in India (see Exhibit 17 for details). JV has an early mover advantage as it
already supplies small quantity to Maruti and Nissan. JV invested JPY200 mn (110 mn) in
2014 to manufacture SRCs in its New Delhi plant.
Minda Stoneridge Instrumentsinstrument clusters and sensors

Stoneridge Inc. is a designer and manufacturer of electrical and electronic components,
modules and systems for the OEMs. Electronics and control devices are the key segments
under which the company supplies products such as electronic instrument clusters,
electronic control units, and driver information systems and sensors, switches, valves, and
actuators. Stoneridge supplies to almost all global OEMs with Ford, Scania, Daimler, General
Motors and Volvo being the largest customers. Stoneridge has particularly higher market
share in the commercial vehicles segment.
Stoneridge invests heavily in technology to develop new products (R&D spend is ~6% of
sales); this we believe has helped the company grow revenues at 15% CAGR over the past
five years. Going ahead, the company is targeting revenue CAGR of 7% over 2013-19E led
largely by 42% CAGR in Asia-Pacific markets including India. It competes with global suppliers
such as Borg Warner, Bosch, Continental, Delphi, Magneti Marelli, Yazaki Corp., etc.
Exhibit 10: Stoneridge is a global manufacturer of automotive electronics and control devices
Revenue breakdown and product segments of Stoneridge Inc., December year-end, 2014 (US$ mn, %)
Stoneridge Inc.
(CY2014 revenues: US$
661mn)
32% 47% 21%
Stoneridge Electronics Stoneridge Control Devices PST Eletrnica (JV, Brazil)
Driver Information Systems Switches & Actuators Electronics

Telematic Systems Sensors: Temperature, Telematics
Advanced Modules (ECU) Rotational Speed, Pressure, Safety & Security
Fluid Level
Power & Switch Modules Emission Reduction and
Alarm & Remote Access
Tachograph Systems Solenoid Control Devices Audio
Sensors & Controls
Minda Stoneridge Instruments

(JV, India)
Electronics
Control Devices

Exhibit 11: Stoneridge is targeting to grow its Asia Pacific revenues at 42% CAGR over 2013-19
Revenue growth targets of Stoneridge across different regions over 2013-19E, December year-ends (%)
Minda Group formed a 51:49 joint venture with US-based Stoneridge Inc. in August 2004 to
enter into manufacturing of instrument clusters (speedometers) for all automotive segments.
As part of the agreement, Minda Group acquired exclusive manufacturing and marketing
rights for India and 17 Asian countries, including Bangladesh, Indonesia, Malaysia, Pakistan,
Philippines, Singapore, Sri Lanka, Thailand and Vietnam.
In our view, Minda Stoneridge JV has been extremely successful so far with revenue CAGR
of 18% over FY2007-15. We expect the company to deliver 17% revenue CAGR over
FY2015-20E.
Key potential growth areas for Minda Corporation due to the JV are:
In instrument clusters, Minda Stoneridge is the market leader in commercial vehicles and
tractor segment with 40-70% market share and has around 13% share in two-wheelers.
Going ahead, apart from industry growth, revenue growth will be led by (1) market share
gains in the two-wheeler segment where the company will try to leverage its existing
relationship with OEMs such as TVS and Honda Motorcycles and (2) increase in content
per vehicle led by offering higher features in current products and new products such as
complete dashboard solutions.
In April 2011, the scope of the joint venture agreement between Minda and Stoneridge
was enhanced to include Stoneridges sensor technology and products in India. As per
the revised agreement, the JV will initially manufacture and supply various speed, low-
and mid-temperature, position and level sensors. Gradually, the JV will manufacture more
sophisticated high-temperature and other sensor products for Indian OEMs. Therefore,
automotive sensors could be a strong growth opportunity for the company. With
increased usage of electronics and governments focus on safety and emission norms,
sensors could potentially be US$430 mn industry in India by FY2020E (see Exhibit 18 for
details). However, we note that competition will be equally tough due to presence of
global Tier-1 suppliers such as Bosch, Continental, Delphi, Denso, etc.

Exhibit 12: Minda Stoneridges revenues have grown at 18% CAGR over FY2007-15
Revenues of Minda Stoneridge JV, March fiscal year-ends, 2006-18E ( mn, %)
(Rs mn) Revenues [LHS] YoY [RHS] (%)

5,000 60
4,500
50
4,000
3,500 18% CAGR over 2007-15
40
3,000
2,500 30
2,000
20
1,500
1,000
10
500
- 0
2016E
2017E
2018E
2006
2008
2009
2011
2013
2015
2007
2010
2012
2014
Minda VAST Access Systemsfour-wheeler security/access control products
Minda Corporation entered into a 50:50 joint venture with Vehicle Access Systems
Technology (VAST) of the US in April 2015 to strengthen its presence in four-wheeler
security products. VAST is a global alliance of three companies, WITTE Automotive of
Germany, Strattec Security Corporation and ADAC Automotive of the US. With revenues of
around US$1.3 bn, VAST is one of the global leaders in access systems with a superior
technological strength in security systems (locksets), door handles, latches and other related
products. It supplies to most of the big OEMs globally in both passenger vehicle and
commercial vehicle segments.
With the JV agreement, Minda VAST will get access to (1) VASTs superior technology for
current products such as locksets and door handles and (2) several new products such as
electronic steering column lock, door modules, latches and hinges, passive entry passive start
systems, etc. We believe that these new products will be key growth drivers for the company
going ahead. We note that over the next two-three years, Minda VAST is targeting revenues
of 2.5 bn from expanding its product offerings particularly latches, hinges and passive entry
systems.
Market share gains will help Minda grow faster than auto production
We expect Minda Corporation to gain market share going ahead particularly in passenger
vehicle wiring harness and two-wheeler locksets. This will be driven by (1) Mindas strong
technical capabilities due to its technology tie-ups with global suppliers and excellent
relationship with some of the domestic OEMs, (2) OEMs initiatives to reduce costs and give
higher share of business to suppliers who can supply quality products at more competitive
pricing and (3) OEMs efforts to reduce dependence on a particular supplier (wherever
possible) and instead have two or three suppliers. In the passenger vehicle wiring harness
segment, Mindas market share will likely increase to ~16% by FY2020E from 7% currently
as the company has become the sole supplier for Marutis new models such as S-Cross, and
Ciaz and have also won order for Renault Kwid. In the two-wheeler lockset segment,
Mindas market share will increase to 32% in FY2020E from 26% in FY2015 as the
company has received 50% share of Honda Motorcycles upcoming 1.2 mn units capacity
plant in Gujarat.

Passenger vehicle wiring harness: Increase in share with Maruti Suzuki to drive
revenue growth
In the passenger vehicle wiring harness segment, Motherson Sumi (JV with Sumitomo
Wiring Systems) is currently the market leader with around 65% market share followed by
Yazaki and Minda Furukawa. Minda Furukawa has 7% market share and it currently
supplies wiring harness to three Japanese OEMs: Maruti Suzuki, Nissan and Honda Cars.
In our view, Motherson, Furukawa and Yazaki have largely similar technical capabilities.
However, we note that Motherson Sumi makes around 17-18% EBITDA margin while Minda
Furukawa is willing to operate at single-digit EBITDA margin and it therefore offers ~5%
lower pricing to OEMs as compared to Motherson. As OEMs are looking to reduce costs, we
believe that this could lead to some shift in market share to Minda Furukawa and also
Yazaki from Motherson Sumi over the next few years. In fact, Minda has already received
100% share of the business from Maruti for its new launches such as Celerio, Ciaz and S-
Cross. Minda will also have higher share for some of the Marutis existing models, as per the
management. With this, we expect Mindas market share with Maruti to increase to 30% by
FY2020E from 12% in FY2015. Further, Minda is likely to gain market share with Renault-
Nissan (won orders for Renault Kwid) and Honda Cars. Overall, we expect Mindas market
share in passenger vehicle wiring harness to increase to ~16% by FY2020E from ~7% in
FY2015. We note that Minda has set up two new wiring harness plants, one each in Noida
and Chennai in FY2015 to cater to increased volume share from the OEMs.
Exhibit 13: Minda Furukawas market share in wiring harness to increase to 16% by FY2020
Passenger vehicle wiring harness: Industry size and Mindas revenues, March fiscal year-ends, 2015-20E (` mn)
2015 2016E 2017E 2018E 2019E 2020E

Passenger vehicle production (mn units) 3.2 3.4 3.9 4.4 5.0 5.6
Content per vehicle (Rs/unit) 12,000 12,240 12,485 12,734 12,989 13,249
Total industry revenues (Rs mn) 38,627 42,120 48,997 56,272 64,635 74,249
Minda's revenues (Rs mn) 2,700 4,325 5,844 7,695 10,207 12,151
Minda's market share (%) 7.0 10.3 11.9 13.7 15.8 16.4
Minda's market share with Maruti 12.5 18.3 21.8 25.0 29.6 29.4
Security Systems: Increase in share with Honda Motorcycles to drive revenue growth
Minda Corporation supplies two-wheeler locksets through standalone entity to OEMs.

Minda has ~26% market share in two-wheeler locksets and is the preferred supplier for
Bajaj Auto, Yamaha Motors and Mahindra two-wheelers (80% plus market share). It also
has small market share with Honda Motorcycles but does not supply to Hero MotoCorp
currently. Jay Ushin (Joint venture between JP Minda Group and Ushin of Japan) is the
primary supplier to Honda Motorcycles while Sandhar Technologies is the main supplier to
Hero MotoCorp. We note that post the break-up of joint venture between Honda and Hero
MotoCorp, both the OEMs are looking to rejig their supplier base in order to diversify away
from existing suppliers. This augurs well for Minda as it has gained 16% market share with
Honda Motorcycles in the past two years. Mindas market share with Honda will further
increase to ~30% by FY2018E as Minda has received (1) 50% share of supplies for Honda
Activa from HMSIs upcoming Gujarat plant and (2) 100% share for Hondas upcoming bike
model. Further, Minda might also gain some market share from Sandhar Technologies and
can start supplying to Hero MotoCorp in FY2017E. Overall, we expect Mindas market share
to increase to ~36% by FY2020E from ~26% currently.
In the passenger vehicle segment, Minda VAST Access supplies locksets to OEMs and has 24%
market share currently. It supplies for more than 90% of the requirements of Ford India and
M&M and has 50-60% business share with Nissan India and Tata Motors. It also supplies for
small requirement of Maruti as well, which will likely increase as Minda is the sole supplier
for S-Cross. Overall, we expect Mindas market share in passenger vehicle locksets to
increase marginally to 26% by FY2020E.

Exhibit 14: We estimate Mindas market share in locksets to increase to 32% by FY2020
Two-wheeler and four-wheeler locksets: Industry size and Mindas revenues, March fiscal year-ends, 2015-20E (` mn)
2015 2016E 2017E 2018E 2019E 2020E

Industry volumes (mn units)
Two-wheeler production 18.5 18.7 20.3 22.0 23.8 25.8
Passenger vehicle production 3.2 3.4 3.9 4.4 5.0 5.6
Average ASP (Rs/unit)
Two-wheeler locksets 500 510 520 531 541 552
Passenger vehicle locksets 1,500 1,530 1,561 1,592 1,624 1,656
Industry revenue size (Rs mn)
Two-wheeler 9,228 9,513 10,535 11,668 12,890 14,240
Passenger vehicle 4,828 5,265 6,125 7,034 8,079 9,281
Total industry revenue size (Rs mn) 14,056 14,778 16,659 18,702 20,969 23,521
Minda's revenues (Rs mn)
Two-wheeler 2,399 2,661 3,351 3,965 4,633 5,152
Total lockset revenues of Minda (Rs mn) 3,549 3,881 4,864 5,741 6,729 7,544
Minda's market share (%)
Two-wheeler 26.0 28.0 31.8 34.0 35.9 36.2
Passenger vehicle 23.8 23.2 24.7 25.2 25.9 25.8
Market share for PVs and 2W (%) 25.2 26.3 29.2 30.7 32.1 32.1
New products that could drive strong revenue growth over the medium term
Due to technology tie-ups with global suppliers, Minda Corporation has an edge in terms of
access to new technology and innovative products. In our view, there are two new
products/segments which could have strong revenue potential for the company in the next
five years.
1. Steering roll connectors (SRC): Mandatory airbags in cars could lead to US$70 mn
industry opportunity
The steering Roll Connector (SRC) is a rotatable connector; which electrically connects the
steering wheel and the column with the vehicle body. It transmits signals and supplies power
from the vehicle body to the various switches within the steering wheel and the column. In
the case of a vehicle accident, the SRC transmits a trigger signal to the air-bag inflator (gas
generator) within the steering and the column to activate an air-bag and also transmits
signals to the various switches, such as horn switches.
Exhibit 15: Steering roll connector Exhibit 16: Steering roll connector fitted in a steering wheel
Source: Kotak Institutional Equities Source: Kotak Institutional Equities

Crash norms are becoming mandatory from October 2017 for new models and by October
2018 for older models. Post this, airbags will become a standard feature in all passenger
vehicles which could lead to an industry opportunity of US$70 mn for SRCs by FY2020E.
Furukawa is the global leader for this product and Minda has an early mover advantage as it
is already supplying small quantity to Maruti and Nissan India. Therefore, we believe that
Minda could potentially capture significant market share in this segment. At 50-60% market
share, SRC could be a 2.2-2.6 bn opportunity for Minda by FY2020E.
Exhibit 17: Steering roll connectors could be a US$70 mn opportunity by FY2020E

Estimation of market size for steering roll connectors in India, March fiscal year-ends, 2015-20E
2015 2016E 2017E 2018E 2019E 2020E

Domestic passenger vehicle sales (mn units) 2.6 2.8 3.1 3.5 3.9 4.4
Vehicles with airbags (%) 12.0 15.0 20.0 30.0 70.0 100.0
Number of vehicle with airbags (mn units) 0.3 0.4 0.6 1.1 2.8 4.4
Average realizations per SRC (Rs) 900 918 936 955 974 994
Total industry size (Rs mn) 281 380 589 1,009 2,689 4,388
Total industry size (USD mn) 4 6 9 16 41 68
Sensors could also be another big opportunity
Sensors could be another opportunity for Minda Corporation. Post changes to JV agreement
in 2011, Minda Stoneridge can now manufacture and supply various speed, low- and mid-
temperature, position and level sensors. Gradually over the next few years, the JV will also
be able to manufacture more sophisticated high-temperature and other sensor products for
four-wheeler OEMs. With increased usage of electronics and government's focus on safety
and emission norms; sensors could potentially be a US$430 mn industry in India by FY2020E
from around US$190 mn currently. The growth in industry size will largely be driven by
higher content per vehicle in passenger vehicle segment due to changes in emission and
safety norms.
At 5-10% market share, automotive sensors could be a 1.4-2.8 bn revenue opportunity for
Minda in FY2020E as compared to companys current revenue from sensors of 0.2 bn. We
note that currently global Tier 1 suppliers such as Bosch, Continental, Delphi and Denso
(including imports) and domestic suppliers such as Pricol are the key players in the
automotive sensors market in India.
Exhibit 18: Industry size of automotive sensors could be more than US$400 mn by 2020E
Estimation of market size for automotive sensors, March fiscal year-ends, 2015-20E
2015 2016E 2017E 2018E 2019E 2020E

Industry volumes (mn units)
Two-wheeler production 18.5 18.7 20.3 22.0 23.8 25.8
Passenger vehicle production 3.2 3.4 3.9 4.4 5.0 5.6
Medium & Heavy commercial vehicle production 0.2 0.3 0.3 0.3 0.4 0.4
Average content per vehicle (Rs)
Two-wheeler 350 350 350 350 450 450
Medium & Heavy commercial vehicle 600 600 700 800 800 800
Industry revenue size (Rs mn)
Two-wheeler 6,460 6,529 7,088 7,697 10,717 11,608
Medium & Heavy commercial vehicle 140 168 215 270 297 327
Total industry revenue size (Rs mn) 12,393 13,200 15,091 17,613 23,507 28,114
Total industry revenue size (USD mn) 191 203 232 271 362 433

KEY RISKS: INEFFICIENT CAPITAL ALLOCATION AND WEAK EXECUTION

We believe the key downside risks to our earnings estimate could emanate from (1) weaker-than-expected
growth in domestic automobile industry, (2) increase in raw material prices, (3) inefficient capital allocation
or aggressive acquisitions and (4) break-up with the JV partners. Further, we would like to closely assess
details of any related party transactions.
Industry-specific downside risks
Weaker-than-expected growth in the domestic automobile sector could lead to downside

risks to our revenue growth estimates for the company. We note that Minda has
particularly higher exposure to domestic two-wheeler sector; continued weakness in rural
markets could impact two-wheeler industry growth.
Slowdown in automotive growth in Europe and Indonesia could impact the performance
of Minda KTSN and PT Minda Automotive Indonesia. These two entities together
accounted for ~28% of consolidated revenues in FY2015.
Company-specific downside risks
Increase in RM prices could impact profitability in the near term. Normally, major
fluctuations in commodity prices are passed on to OEMs with a lag of 1-2 quarters.
Therefore, increase in raw material prices could impact profitability in the near term.
Further, in situations when profitability of OEMs are under pressure, then due to lower
pricing power it might be difficult for Minda to fully pass on the impact of higher
commodity prices.
Inefficient capital allocation or aggressive acquisitions could impact return ratios.

We expect Minda to generate reasonable cash flows and thereby reduce debt over the
next three years. Return rations will also likely improve by FY2018E. However, if the
company invests more money in its low RoCE overseas subsidiaries or does any acquisition
at aggressive valuations, then there could be downside risks to our estimates. As per our
assessment, Minda does not have a very successful track record in acquisitions. Minda
acquired KTSN in 2007 for EUR43 mn and revenues of EUR50 mn; even in FY2015,
KTSNs revenues were around EUR50 mn and it reported PBT losses in FY2012-13 and
only marginal profits in FY2014-15. Schenk Plastic Solutions and Aksys acquired in 2008
and 2010 respectively were incurring losses and were finally sold off in FY2014.
Break-up with JV partners could impact companys growth prospects. Historically,

Minda has had strong relationships with its JV partners Furukawa Electric and Stoneridge.
However, going ahead, if due to any reason, there is a break-up in the JV agreement,
then there could significant downside risks to our earnings estimates for the company.
Related-party transactions need to be closely examined. We would like to closely

examine valuation and other details of all related-party transactions going ahead. Over
the last five years, Minda has entered into several transactions with promoter to acquire
stakes in group companies. Valuation details for all the transactions are not available but
valuation of recent transactions such as Minda Stoneridge and Minda Furukawa appear
reasonable to us. Further, we note that apart from acquisitions, Minda has provided some
loans to promoters entities as well as provided corporate guarantees to subsidiaries and
joint ventures.

Exhibit 19: Valuation of acquisitions of promoter entities appear reasonable to us

Valuation of transactions between Minda Corporation and Minda Group (Promoter), 2011-15
Minda PT Minda Minda Minda Vietnam Minda Minda
Stoneridge Automotive Furukawa Automotive Automotive Schenk Plastic
Instruments Indonesia Electric Company Solutions Solutions GmbH
Stake acquired (%) 51.0 100.0 49.0 100.0 50.0 94.0
Acquisition date Oct. 1, 2015 Feb. 15, 2014 Feb. 1, 2014 Feb. 15, 2014 Apr. 3, 2012 Oct. 11, 2011
Cost of investment (Rs mn) 649 373 423 78 47 340
Implied valuation of the entity (Rs mn) 1,273 373 864 78 94 362
One-yr forward financials of the acquired entity (Rs mn)
Net worth 809 359 493 169 24 682
Revenues 3,136 1,064 3,038 255 1,642 7,846
Net profit 117 46 53 24 (2) 14
Valuation of the acquired entity (one-year forward)
P/B (X) 1.6 1.0 1.8 0.5 4.0 0.5
Price/Sales (X) 0.4 0.4 0.3 0.3 0.1 0.0
P/E (X) 10.9 8.1 16.4 3.2 NA 26.1
Exhibit 20: Minda Corporation has given loans of 757 mn to related parties
Loans and corporate guarantees given to related parties, March fiscal year-ends, 2012-15 (` mn)
2012 2013 2014 2015

Loans to related parties
Minda Capital Limited 43 444 422
Minda Europe Gmbh 285 237
Minda KTSN Plastic Solution GmbH 67
Minda Management Services 47 20
Minda Sai 268 454
Others 43 4 24 11
Total loans given to related parties 311 548 753 757
Corporate guarantees given by the company
Minda KTSN Plastic Solutions GmbH & Co. KG, Germany 570 690 1,275 1,030
Minda SAI Limited 600 600
Mayank Auto Engineers Pvt. Ltd 696
Minda Furukawa Electric Private Limited 591
Minda Management Services Limited 30
Riddi Techauto Private Limited 12
Total corporate guarantees given by the company 570 1,387 1,875 2,263

FINANCIALS: GROWTH LED BY MARKET SHARE GAINS

We expect Minda Corporations consolidated net profit to grow at 28% CAGR over FY2016-19E led by 22%
growth in revenues and largely steady EBITDA margins over the same period. We expect revenue growth to
be driven by market share gains particularly with Maruti and Honda Motorcycles and launch of new products.
Due to limited capex requirements, we expect FCF generation of 1.8 bn over FY2015-18E. With this, net debt
to equity ratio will likely decline to 0.5X in FY2018E from 1X in FY2015.
Market share gains in four-wheeler wiring harness and two-wheeler locksets to

drive revenue growth
We expect the companys revenues to grow at 22% CAGR over FY2016-19E led by (1) 39%
revenue CAGR at Minda Furukawa due to market share gains particularly with Maruti Suzuki
and Renault-Nissan, (2) market share in gains in two-wheeler locksets due to increased share
from Honda Motorcycles and (3) acquisition of 51% stake in Minda Stoneridge from the
promoter in October 2015, which offers strong growth opportunities in automotive sensors
market.
In the four-wheeler wiring harness segment, we expect market share of Minda Furukawa
(MFE) to increase from around 7% in FY2015 to 14% by FY2018E. This will lead to 39%
revenue CAGR for the company over FY2016-19E. MFE has ~12% market share with
Maruti Suzuki currently, which will likely increase to ~25% in FY2018E as the company
has received 100% business for Marutis newer models and there will be some increase in
market share for existing models as well. With such strong revenue growth, we expect
the companys EBITDA margins to improve to 5-9% levels over FY2016-18E as compared
to 2.4% in FY2015.
We expect standalone revenues to grow at 17% CAGR over FY2016-19E. In two-wheeler

locksets, Minda has received order to supply 50% of Honda Motorcycles requirements
for its upcoming Gujarat plant. With this, we expect Mindas share of business for Honda
Motorcycles to increase to 30% by FY2018E from 16% in FY2015. In the die casting
business, revenues will likely grow by 28% CAGR over FY2016-19E as the company has
received new orders to supply (1) brackets & holders from TVS and Bajaj Auto and (2)
compressor housings for turbochargers from Ford and Tata Motors.
Minda Sai will likely deliver 16% revenue CAGR over FY2016-19E; higher than our
expectations of domestic automotive volume growth due to market share gains. The
company is the market leader in the two-wheeler wiring harness segment with 33%
market share, which will likely increase to 36% by FY2018E due to some increase in share
from Hero MotoCorp. The company is targeting new business from other OEMs and is
looking to increase market share to ~50%, which we have not built in our estimates.
Minda Sai has ~40% market share in tractors and ~20% in MHCVs, which could marginally
increase over the next 2-3 years due to consolidation of business from existing customers.
For Minda Stoneridge, due to increased usage of electronics in vehicles, sensors could be
a strong growth area where revenues could increase significantly over the next 3-5 years as
compared to 0.2 bn currently. In instrument clusters, Minda Stoneridge is the market
leader in commercial vehicles and tractors segments (40-70% market share) while it has
around 13% market share in two-wheelers and limited presence in passenger vehicles.
Going ahead, the company is targeting to significantly increase its market share in two-
wheelers in our view; this is possible as Minda has strong relationship with all two-
wheeler OEMs (except Hero). However, we are not building in any significant market
share gains in our estimates.

We expect performance of the companys overseas subsidiaries in both Europe and

Indonesia to remain muted over the next three years due to lack of any new orders. In
Indonesia, the company primarily supplies locksets to two-wheeler OEMs such as Yamaha,
Suzuki and Kawasaki. We note that two-wheeler volumes in Indonesia are under pressure
with industry volumes down almost 20% yoy in the first nine months of CY2015.
Exhibit 21: Wiring harness segment will be the key revenue growth driver over the next three years
Revenue break-up across segment, March fiscal year-ends, 2013-19E (` mn)
Revenue CAGR (%)
2013 2014 2015 2016E 2017E 2018E 2019E 2013-15 2016-19E
Revenues (Rs mn)
Standalone business 5,842 6,039 6,368 6,733 7,975 9,187 10,753 4.4 16.9
2-wheeler lock kits for OEM 2,399 2,661 3,351 3,965 4,633 20.3
Locksets for after-market 1,141 1,090 1,282 1,346 1,454 1,570 1,696 8.0
Die casting (Products sold outside group) 1,008 1,046 1,322 1,619 2,189 27.9
Exports 662 823 872 872 959 1,055 1,161
Others 807 807 888 977 1,075
Minda SAI 3,624 4,413 5,088 5,308 6,054 7,046 8,191 18.5 15.6
Minda Furukawa 1,848 4,618 6,210 8,152 12,259 38.5
Minda KTSN 4,048 4,548 4,515 3,838 4,030 4,231 4,231 5.6 3.3
PT Minda Automotive Indonesia 1,064 798 838 880 924 5.0
Minda Vietnam Automotive 255 255 267 281 295 5.0
Minda Automotive Soluction (Replacement) 1,642 1,597 1,938 2,054 2,275 2,534 2,760 8.6 10.4
Minda Schenk 8,368
Minda Stoneridge 1,568 3,730 4,580 5,509 52.0
Minda VAST 2,200 3,075 3,493 3,986 21.9
Revenues 23,525 16,794 21,076 27,370 34,453 40,384 48,908 (5.3) 21.3
Less: Eliminations 2,176 1,152 1,744 1,785 1,893 2,031 2,180
Other operating income 387 297 375 205 260 307 374
Consolidated net revenues 21,736 15,939 19,706 25,790 32,821 38,660 47,102 (4.8) 22.2
Domestic 8,657 10,568 13,000 20,027 26,726 32,213 40,492 22.5 26.4
Exports 662 823 872 872 959 1,055 1,161 14.8 10.0
Overseas entities (largely Europe) 12,417 4,548 5,834 4,891 5,135 5,392 5,450 (31.5) 3.7
Revenues by business segment (Rs mn)
Safety security & restraint systems 5,764 6,681 7,913 10,254 12,537 14,343 16,538 17.2 17.3
Driver information & telematics systems 4,056 4,644 7,116 11,493 15,994 19,778 25,959 32.5 31.2
Interior systems 11,529 4,317 4,303 3,838 4,030 4,231 4,231 (38.9) 3.3
Contribution to revenues (%)
Safety security & restraint systems 27 43 41 40 39 37 35
Driver information & telematics systems 19 30 37 45 49 52 56
Interior systems 54 28 22 15 12 11 9
Notes:
(a) 2013-15 revenue CAGR is impacted by sell-off of Minda Schenk.
We expect 28% EPS CAGR; expect EBITDA margins to remain largely steady
Minda Corporation has delivered EBITDA margins in the 8-10% range over the past five
years except in FY2013 due to lower profitability in Minda Schenk, which was sold off in
1HFY14. We believe that product segments such as locksets and wiring harness do not
command strong pricing power with the OEMs. In fact, suppliers normally offer lower prices
to get new business and gain market share. Having said that, raw material prices are largely
passed through to OEMs; therefore, there are not much margin risk associated from increase
in commodity prices either at least over the medium term. For Minda, we expect operating
leverage benefits to be largely passed to OEMs to gain market share. Overall, we expect
EBITDA margins to remain within 9-10% range over the next three years.

Exhibit 22: We expect 28% PAT CAGR over FY2016-19E Exhibit 23: EBITDA margins to remain largely steady
Consolidated net profits, March fiscal year ends, 2009-19E (` mn) Consolidated EBITDA and margins, March fiscal year-ends, 2009-19E
(` mn, %)
(Rs mn)
2,250 (Rs mn) Consol. EBITDA [LHS] (%)
5,000 EBITDA margin [RHS] 14
2,000
1,750 12
4,000
1,500 10
1,250 3,000 8
1,000
750 2,000 6
500 4
250 1,000
2
0
0 0
2016E
2017E
2018E
2019E
2009
2010
2012
2013
2014
2011
2015
2016E
2017E
2018E
2019E
2009
2010
2011
2012
2013
2014
2015
FCF generation and limited capex requirements to strengthen balance sheet

We expect Minda Corporations net debt-to-equity ratio to decline to 0.5X by FY2018E from
1X in FY2015 led by strong cash flow generation and limited capex requirements. Most of
the companys subsidiaries are operating at ~70% capacity utilization on two-shift basis;
therefore, we dont foresee significant capex requirement over the next three years. There
might be some capacity expansion required for die casting division and Minda Sai as these
plants are operating at 90%+ and 80% capacity utilization respectively. We conservatively
build in annual capex of around 0.8-1.4 bn over FY2016-18E (excluding amount paid for
acquisition of Stoneridge); maintenance capex is around 0.4-0.5 bn.
Exhibit 24: We expect net debt to equity to decline over the next three years
Consol net debt and net debt to equity, March fiscal year-ends, 2011-18E ( mn, X)
(Rs mn) Net debt [LHS] Net debt-to-equity ratio [RHS] (X)
6,000 1.6
1.4
5,000
1.2
4,000
1.0
3,000 0.8
4,983 5,166 4,956 4,378
4,744 4,577 0.6
2,000 3,787
0.4
1,000
1,391 0.2
0 -
2011 2012 2013 2014 2015 2016E 2017E 2018E

Exhibit 25: We expect FCF generation of 1.8 bn over FY2016-18E

Capex and cash flow generation, March fiscal year-ends, 2011-18E ( mn)
2011 2012 2013 2014 2015 2016E 2017E 2018E

Operating cashflow (131) (2,627) (1,235) (653) (175) (1,626) (1,632) (1,535)
Capex/Acquisitions (187) (1,565) (1,150) (321) (455) (1,449) (1,200) (1,400)
FCF 424 (1,797) (472) 213 884 (88) 760 1,113
In FY2013, Minda Corporation invested 293 mn in subsidiaries to fund losses in its German
subsidiary, Minda KTSN. We note over the past two years due to strong focus on cost
reduction and disposal of a plant in Czech Republic, KTSN has reported marginal profits in
FY2014-15. Therefore, we dont expect more investment in KTSN from the parent entity.
In FY2014, company invested 921 mn towards (1) acquisition of stake in Minda Furukawa
and (2) investment in Minda Sai to acquire 100% stake in PT Minda Automotive Indonesia
and Minda Vietnam. Going ahead, as per our discussions with the management, company
does not foresee any meaningful investment in subsidiaries.
Exhibit 26: We dont expect significant investment requirement in subsidiaries/JVs

Investment in subsidiaries & joint ventures, March fiscal year-ends, 2009-18E ( mn)
2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E
Subsidiaries
Minda Automotive Solutions Limited 37 37 47 47 47 47 47 47
Minda Europe B.V. Netherlands 17 17 17 17 17 17 17 17 17 17
Minda Furukawa Electric Private Limited 423 449 449 449 449
Minda KTSN Plastic Solutions GmbH & Co. KG, Germany 404 404 442 532 815 815 881 881 881 881
Minda Management Services Limited 1 1 56 56 56 56 56
Minda SAI 103 155 155 405 405 405 405 405
Spark Minda Foundation
Joint ventures
Minda VAST Access Systems Private Limited 193 237 237 237 237
KTSN Kunststofftechnik Sachen GmbH & Co 442
Total investments 863 421 599 743 1,035 1,956 2,092 2,092 2,092 2,092
Addition (442) 178 144 293 921 136
Working capital to remain steady
Minda Corporation has a reasonably well-managed working capital with receivables at two
months of sales and one-and-a-half months of inventory. However, we note that creditor
days are surprisingly higher at 57 days of sales. In FY2015, this was partly due to complete
consolidation of Minda Furukawas balance sheet while P&L was consolidated only for six
months as it became subsidiary on October 1, 2014. We are building in some decline in
creditor days over the next two years (due to increased local sourcing by Minda Furukawa as
compared to imports currently where creditor days are high) but the overall working capital
will largely remain steady at slightly more than two months of sales.

Exhibit 27: Working capital requirement to remain steady at 55-60 days

Working capital and working capital days, March fiscal year-ends, 2011-18E ( mn, days)
2011 2012 2013 2014 2015 2016E 2017E 2018E

Working capital (Rs mn)
Debtors 1,631 2,573 3,055 2,915 3,176 4,157 4,946 5,825
Inventory 967 2,373 2,527 1,867 2,308 3,106 3,985 4,731
Loans & Advances 559 610 935 1,882 1,752 2,038 2,358 2,642
Other current assets 455 23 66 101 187 187 187 187
Creditors 1,692 2,368 2,446 2,488 3,076 4,141 5,098 6,053
Customer advances 52 37 180 284 236 308 392 462
Other current liabilities & provisions 384 805 970 680 710 825 954 1,072
Net working capital (ex-cash) 1,485 2,369 2,987 3,313 3,401 4,214 5,030 5,798
Working capital (days)
Debtors 81 68 51 67 59 59 55 55
Inventory 48 63 42 43 43 44 44 45
Loans & Advances 28 16 16 43 32 29 26 25
Other current assets 23 1 1 2 3 3 2 2
Creditors 84 62 41 57 57 59 57 57
Customer advances 3 1 3 7 4 4 4 4
Other current liabilities & provisions 19 21 16 16 13 12 11 10
Net working capital (ex-cash) 74 62 50 76 63 60 56 55
Return ratios to improve over the next three years

We expect companys RoE to improve to 22% by FY2018E from ~20% in FY2015. Although
leverage will decline, improvement in RoE will be driven by increase in capacity utilization
(higher asset turnover) and some improvement in net margins. RoCE will likely improve to 19%
in FY2018E from ~12% in FY2015.
Exhibit 28: We expect return ratios to improve over the next three years
Return ratios, March fiscal year-ends, 2010-18E (%)
2010 2011 2012 2013 2014 2015 2016E 2017E 2018E

Dupont analysis
Net margin (%) 3.6 4.7 4.8 0.3 4.5 4.4 3.6 4.0 4.3
Total asset turnover (X) 1.8 1.3 1.5 1.8 1.2 1.4 1.6 1.8 1.9
Equity multiplier (X) 5.0 3.3 3.0 3.5 3.5 3.2 3.1 3.0 2.8
RoE (%) 32.7 20.3 21.2 1.9 19.7 20.5 18.3 21.5 22.4
Other ratios
RoCE (%) 15.0 13.7 15.4 2.0 10.4 12.3 13.7 16.7 18.8
Fixed asset turnover (X) 1.9 1.7 1.6 2.4 1.6 1.9 2.2 2.5 2.7

Exhibit 29: We expect consolidated net profit to grow at 25% CAGR over FY2016-20E
Minda Corporation consolidated profit model, March fiscal year-ends, 2011-20E (` mn)
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Net sales 7,322 13,855 21,736 15,939 19,706 25,790 32,821 38,660 47,102 53,314
Cost of raw materials (4,592) (8,491) (13,068) (9,733) (11,975) (16,118) (20,677) (24,549) (30,146) (34,121)
Employee expenses (959) (2,239) (4,636) (2,657) (3,365) (4,207) (5,216) (5,999) (7,318) (8,270)
Other expenses (1,013) (1,775) (2,945) (2,291) (2,510) (3,072) (3,791) (4,357) (5,071) (5,779)
EBITDA 758 1,349 1,087 1,257 1,855 2,393 3,137 3,755 4,567 5,145
Other income 40 204 362 304 227 179 189 206 220 235
Depreciation (172) (455) (771) (478) (603) (756) (849) (941) (1,072) (1,213)
Finance cost (174) (268) (424) (275) (395) (427) (441) (377) (361) (281)
Profit before tax and exceptional 452 830 254 808 1,085 1,390 2,035 2,642 3,353 3,884
Extraordinary items (176) (30) 147 24
Income tax (105) (138) (175) (172) (272) (347) (509) (661) (939) (1,088)
Share of JVs 6 10 44
Minority interest (2) 10 14 (114) (228) (331) (478) (549)
Profit after tax 347 519 60 793 895 929 1,298 1,651 1,937 2,248
Adjusted net profit 347 658 67 725 876 929 1,298 1,651 1,937 2,248
EPS (Rs) 1.8 3.1 0.3 3.5 4.2 4.4 6.2 7.9 9.3 10.7
Ratios (%)
EBITDA margin 10.4 9.7 5.0 7.9 9.4 9.3 9.6 9.7 9.7 9.6
Gross margin 37.3 38.7 39.9 38.9 39.2 37.5 37.0 36.5 36.0 36.0
Exhibit 30: We expect consolidated return ratios to improve over the next three years
Minda Corporation consolidated balance sheet, March fiscal year-ends, 2011-20E (` mn)
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Share capital 236 396 396 395 607 607 607 607 607 607
Reserves & surplus 2,457 3,134 3,066 3,499 4,059 4,863 6,012 7,486 9,211 11,222
Total shareholders equity 2,693 3,530 3,462 3,894 4,666 5,470 6,619 8,093 9,817 11,828
Minority interest 33 51 241 355 583 914 1,391 1,941
Deferred tax liabilities 85 98 103 86 57 57 57 57 57 57
Short-term borrowings 686 3,184 3,427 3,426 3,212 4,212 3,712 2,912 2,712 1,712
Long-term borrowings 1,359 1,575 1,891 2,097 1,807 1,807 1,807 1,807 1,807 1,807
Total borrowings 2,046 4,759 5,319 5,523 5,018 6,018 5,518 4,718 4,518 3,518
Provisions 175 266 261 153 245 320 407 480 585 662
Trade payables 1,692 2,368 2,446 2,488 3,076 4,141 5,098 6,053 7,433 8,413
Other current liabilities 260 577 890 811 701 813 939 1,054 1,205 1,331
Other long-term liabilities 291 198 167 212 212 212 212 212 212
Other liabilities 2,127 3,502 3,794 3,619 4,234 5,485 6,657 7,799 9,434 10,618
Total liabilities 6,951 11,922 12,729 13,122 14,216 17,386 19,434 21,581 25,218 27,962
Current Investments 145
Inventories 967 2,373 2,527 1,867 2,308 3,106 3,985 4,731 5,809 6,575
Trade receivables 1,631 2,573 3,055 2,915 3,176 4,157 4,946 5,825 6,452 7,303
Cash and bank balances 655 972 575 540 441 853 562 341 953 986
Short-term loans and advances 559 610 935 1,882 1,752 2,038 2,358 2,642 3,034 3,342
Other current assets 455 23 66 101 187 187 187 187 187 187
Total current assets 4,267 6,696 7,158 7,305 7,864 10,340 12,037 13,726 16,435 18,393
Net fixed assets 2,545 4,867 4,665 5,268 5,708 6,402 6,753 7,212 8,139 8,926
Capital work in progress 101 111 677 150 153 153 153 153 153 153
Non-current investments 38 44 245 289 289 289 289 289 289
Other non-current assets 203 229 154 202 202 202 202 202 202
Non current assets 2,684 5,226 5,571 5,817 6,352 7,046 7,397 7,856 8,783 9,570
Total assets 6,951 11,922 12,729 13,122 14,216 17,386 19,434 21,581 25,218 27,962
Ratios
Debt/equity (X) 0.8 1.3 1.5 1.4 1.1 1.1 0.8 0.6 0.5 0.3
Net debt/equity (X) 0.5 1.0 1.4 1.3 1.0 0.9 0.7 0.5 0.4 0.2
RoAE (%) 20.3 21.2 1.9 19.7 20.5 18.3 21.5 22.4 21.6 20.8
RoACE (%) 13.7 15.4 2.0 10.4 12.3 13.7 16.7 18.8 20.7 21.6

Exhibit 31: We expect consolidated entity to generate FCF of 1.8 bn over FY2016-18E
Minda Corporation consolidated cash flow statement, March fiscal year-ends, 2011-20E (` mn)
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Profit before tax 452 654 224 956 1,109 1,390 2,035 2,642 3,353 3,884
Depreciation 172 455 771 478 603 756 849 941 1,072 1,213
(Gain) on sale of assets (4)
Provisions 5 (10)
Share of profit from associate 10 44
Interest Income (3) (61) (62) (71) (64) (50) (40) (20) (25) (30)
Dividend received
Interest expense 132 268 424 275 395 427 441 377 361 281
Others 5 112 (615) (387)
Operating cash flow before changes in WC 758 1,308 1,470 1,033 1,699 2,522 3,285 3,941 4,762 5,349
Changes in WC (66) (1,314) (617) (326) (88) (813) (816) (768) (462) (741)
Income taxes paid (82) (226) (175) (172) (272) (347) (509) (661) (939) (1,088)
Cash flow from operations 610 (232) 677 534 1,339 1,362 1,960 2,513 3,361 3,521
(Purchase) of PPE (187) (1,565) (1,150) (321) (455) (1,449) (1,200) (1,400) (2,000) (2,000)
Investments (118) 249
Interest income 3 51 62 71 64 50 40 20 25 30
Others (42) (34) (76) (200) (47)
Cash flow from investing (343) (1,299) (1,164) (450) (438) (1,399) (1,160) (1,380) (1,975) (1,970)
Interest expense (132) (254) (424) (275) (395) (427) (441) (377) (361) (281)
Change in debt (619) 1,634 560 205 (505) 1,000 (500) (800) (200) (1,000)
Change in equity
Dividend and dividend tax paid (25) (34) (46) (49) (101) (124) (149) (177) (213) (237)
Others
Cash flow from financing activities 163 1,847 90 (119) (1,000) 449 (1,091) (1,354) (774) (1,518)
Net change in cash 430 317 (397) (35) (99) 412 (291) (222) 612 33
Cash at start of year 225 655 972 575 540 441 853 562 341 953
Cash at year end 655 972 575 540 441 853 562 341 953 986
Free cash flow 424 (1,797) (472) 213 884 (88) 760 1,113 1,361 1,521
Exhibit 32: We expect standalone net profit to grow at 20% CAGR over FY2015-18E
Minda Corporation standalone profit model, March fiscal year-ends, 2011-20E (` mn)
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Net sales 4,842 5,597 5,982 6,168 6,491 6,867 8,134 9,370 10,968 12,065
Cost of raw materials (3,047) (3,520) (3,860) (3,847) (4,037) (4,223) (5,043) (5,828) (6,822) (7,504)
Employee expenses (489) (647) (700) (737) (813) (895) (1,038) (1,193) (1,408) (1,549)
Other expenses (651) (822) (866) (990) (954) (963) (1,120) (1,271) (1,480) (1,628)
EBITDA 654 609 556 594 686 787 933 1,078 1,258 1,384
Other income 40 81 123 69 47 39 44 53 59 69
Depreciation (119) (143) (168) (217) (174) (181) (212) (241) (272) (308)
Finance cost (130) (130) (138) (112) (78) (56) (56) (51) (37) (23)
Profit before tax and exceptional 445 416 373 334 482 589 709 839 1,008 1,123
Extraordinary items (23) (22)
Income tax (103) (15) (83) (94) (140) (177) (213) (252) (303) (337)
Profit after tax 342 402 267 218 341 412 496 587 706 786
Adjusted net profit 342 402 285 286 340 412 496 587 706 786
EPS (Rs) 1.8 1.9 1.4 1.4 1.6 2.0 2.4 2.8 3.4 3.8
Ratios (%)
EBITDA margin 13.5 10.9 9.3 9.6 10.6 11.5 11.5 11.5 11.5 11.5
Gross margin 37.1 37.1 35.5 37.6 37.8 38.5 38.0 37.8 37.8 37.8

Exhibit 33: We expect standalone net debt to decline

Minda Corporation standalone balance sheet, March fiscal year-ends, 2011-20E (` mn)
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Share capital 236 396 396 396 608 608 608 608 608 608
Reserves & surplus 1,606 2,280 2,501 2,673 2,707 2,995 3,342 3,752 4,245 4,794
Total shareholders equity 1,842 2,676 2,897 3,068 3,315 3,603 3,950 4,360 4,853 5,402
Deferred tax liabilities 46 51 62 52 35 35 35 35 35 35
Short-term borrowings 183 978 829 781 518 518 468 318 168 18
Long-term borrowings 304 105 179 137 70 70 70 70 70 70
Total borrowings 487 1,083 1,008 918 589 589 539 389 239 89
Provisions 90 88 84 73 102 107 127 147 172 189
Trade payables 957 902 870 783 617 647 726 851 991 1,122
Other current liabilities 50 91 170 333 176 185 202 218 239 255
Other long-term liabilities 87 47 62 83 83 83 83 83 83
Other liabilities 1,096 1,168 1,170 1,251 978 1,023 1,138 1,300 1,484 1,649
Total liabilities 3,471 4,979 5,136 5,290 4,917 5,249 5,661 6,084 6,611 7,175
Current Investments 145
Inventories 321 498 382 401 348 364 409 479 558 632
Trade receivables 860 1,017 1,180 1,210 1,049 1,107 1,243 1,450 1,685 1,908
Cash and bank balances 459 758 160 239 93 172 254 328 402 564
Short-term loans and advances 197 508 734 156 210 220 231 243 255 268
Other current assets 17 9 14 5 2 2 2 2 2 2
Total current assets 1,855 2,934 2,471 2,012 1,701 1,865 2,139 2,502 2,902 3,373
Net fixed assets 923 1,035 1,113 1,387 1,239 1,408 1,546 1,605 1,733 1,826
Capital work in progress 94 97 362 36 42 42 42 42 42 42
Non-current investments 599 743 1,035 1,763 1,855 1,855 1,855 1,855 1,855 1,855
Other non-current assets 170 155 91 80 80 80 80 80 80
Non current assets 1,616 2,044 2,666 3,278 3,215 3,385 3,523 3,582 3,710 3,802
Total assets 3,471 4,979 5,136 5,290 4,917 5,249 5,661 6,084 6,611 7,175
Ratios
Debt/equity (X) 0.3 0.4 0.3 0.3 0.2 0.2 0.1 0.1 0.0 0.0
Net debt/equity (X) 0.0 0.1 0.3 0.2 0.1 0.1 0.1 0.0 (0.0) (0.1)
RoAE (%) 28.1 17.8 10.2 9.6 10.7 11.9 13.1 14.1 15.3 15.3
RoACE (%) 26.1 22.3 11.8 8.3 10.5 11.5 13.0 14.4 16.1 16.7

Exhibit 34: We expect company to generate strong operating cash flows over the next three years
Minda Corporation standalone cash flow statement, March fiscal year-ends, 2011-20E (` mn)
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Profit before tax 445 416 350 311 489 589 709 839 1,008 1,123
Depreciation 119 143 168 217 174 181 212 241 272 308
(Gain) on sale of assets (34) 1 (4) 25 21
Provisions 5 (4) 1 3 2
Interest Income (3) (61) (78) (46) (17) (39) (44) (53) (59) (69)
Dividend received (10) (15)
Interest expense 105 118 128 112 78 56 56 51 37 23
Others 8 1 (10) 5
Operating cash flow before changes in WC 637 612 552 613 752 787 933 1,078 1,258 1,384
Changes in WC (156) (545) (259) 625 (142) (40) (76) (128) (141) (145)
Income taxes paid (82) (109) (59) (72) (114) (177) (213) (252) (303) (337)
Cash flow from operations 398 (42) 235 1,167 496 569 644 698 815 902
(Purchase) of PPE (176) (277) (514) (201) (205) (350) (350) (300) (400) (400)
Investments (178) (288) (293) (728) (91)
Interest income 3 54 83 55 20 39 44 53 59 69
Others 37 25 166 36 144
Cash flow from investing (314) (487) (558) (839) (133) (311) (306) (247) (341) (331)
Interest expense (105) (124) (130) (113) (80) (56) (56) (51) (37) (23)
Change in debt (478) 484 (76) (90) (330) (50) (150) (150) (150)
Change in equity 939 502
Dividend and dividend tax paid (25) (34) (70) (49) (99) (124) (149) (177) (213) (237)
Others 3
Cash flow from financing activities 331 828 (275) (249) (509) (180) (255) (378) (400) (409)
Net change in cash 415 299 (598) 79 (146) 79 83 73 74 162
Cash at start of year 44 459 758 160 239 93 172 254 328 402
Cash at year end 459 758 160 239 93 172 254 328 402 564
Free cash flow 222 (320) (279) 965 291 219 294 398 415 502

APPENDIX 1: COMPANY PROFILE

Minda Corporation is the flagship company of Spark Minda-Ashok Minda Group and was incorporated in
1985. The company is one of the leading suppliers of security systems & locksets and wiring harness to both
two-wheeler and four-wheeler OEMs. The company is also engaged in manufacturing of electronic and
mechanical speedometers with market leadership in commercial vehicles and tractor segments. Through its
European subsidiaries, Minda also supplies interior plastic components to global OEMs. The company has a
well-diversified customer base with particular dominance in two-wheelers.
Minda Corporation (MCL), incorporated in 1985, is the flagship company of Spark Minda-
Ashok Minda Group with revenues of ~`20 bn in FY2015. The company has around 30
plants spread across India as well as in Europe (three plants) and South East Asia (two plants).
Minda is primarily an OEM supplier with replacement accounting for only 11% of its
revenues. It has a well-diversified customer base; Bajaj Auto, Yamaha, Mahindra & Mahindra,
Maruti and Volkswagen are the top five customers accounting for ~38% of consolidated
revenues in FY2015. The company generated 68% of its FY2015 consolidated revenues
from the domestic market while overseas entities in Europe, Indonesia and Vietnam and
some exports from India contributed the remaining 32% of revenues.
The company supplies automotive components to OEMs under three main segments:
Safety & security systems. This segment accounted for 41% of companys consolidated
revenues in FY2015. Minda has 26% market share in two-wheeler locksets and around
24% share in four-wheeler locksets. Through Minda VAST JV, Minda also supplies other
products such as door handles and latches primarily to Nissan, Ford and M&M in India.
Driver information & telematics systems. The company supplies wiring harness to
passenger car OEMs through Minda Furukawa JV and has ~7% market share currently.
Minda is the sole supplier of wiring harness to TVS and has 33% market share in the
overall two-wheeler segment. It also has high market share with Ashok Leyland and M&M
in MHCVs and tractor segments respectively. Minda acquired 51% stake in Minda
Stoneridge JV in October, 2015 which is the market leader in speedometers for CVs and
tractor segment and has around 13% market share in two-wheelers.
Interior systems. Minda KTSN Plastic Solutions supplies several plastic components to
global OEMs through its three plants in Europe. This segment has hardly reported any
revenue growth over the past three years.

Exhibit 35: Business segment and plant locations of key subsidiaries and joint ventures
Company Products Plant locations Key customers

Saftey & security systems
Two-wheeler locksets
Noida, Pune, Aurangabad Bajaj, Honda Motorcycles,
Minda Corporation Die casting products like Brackets & Holders,
and Pantnagar Yamaha, TVS, Honeywell
Compressor Housings for Turbochargers, etc
Four-wheeler locksets M&M, Ford, Nissan, Tata
Minda VAST JV Pune and Manesar (Haryana)
Door Handles, Door latches, etc Motors
Two-wheeler locksets
PT Minda Automotive Indonesia West Java, Indoneiua Yamaha, Suzuki, Kawasaki
Speedometers
Two-wheeler locksets Yamaha, Suzuki, Kawasaki,
Minda Vietnam Automotive Hanoi, Vietnam
Speedometers & Wiring harness Piaggio
Driver information & telematics systems
Wiring harness for passenger vehicles Bawal (Haryana), Chennai,
Minda Furukawa JV Maruti, Nissan, Honda Cars
Steering Roll Connectors (SRCs), Junction box Noida, New Delhi
Greater Noida, Mumbai,
Wiring harness for two-wheelers, CVs, tractors and TVS, Honda Motorcycles,
Minda Sai Chennai, Pithampur, Pune
three-wheelers M&M, Ashok Leyland
and Haridwar
Instrument clusters for all auto segments Tata Motors, M&M, Ashok
Minda Stoneridge Pune and Chennai
Sensors Leyland, TAFE, Escorts, Bajaj
Interior systems
Plastic products like Glove Box, Cup Holder, Ashtray, Audi, Mercedes, VW Group,
Germany, Poland, Czech
Minda KTSN Plastic Solutions Centre Console, Door & Steering Column, Engine Faurecia, Magna, Delphi,
Republic
Compartment, Air Ducts, Seat ,Noise Absorber etc. Bosch
Exhibit 36: Locks and Wiring harness are key business segments Exhibit 37: Domestic market accounts for ~68% of revenues
Revenue break-up by business segments, March fiscal year end, 2015 Revenue break-up by geography, March fiscal year ends, 2015 (%)
(%)
Asia America,
exculding 0.9
Interior
India, 7.9
systems,
22.3
Safety
security &
restraint Euope,
systems, 23.2
40.9
Driver
information
&
telematics India, 68.0
systems,
36.8
Source: Company, Kotak Institutional Equities Source: Company, Kotak Institutional Equities
Well-diversified customer base with dominance in two-wheelers

Minda Corporation has successfully diversified its customer base from being heavily
dependent on Bajaj Auto a few years ago. Currently, Minda caters to several OEMs across all
automotive segments; top five OEMs now account for ~38% of consolidated revenues.
Minda derives 39% of its revenues from two-wheelers, 32% from passenger vehicles and 18%
from commercial vehicle segment.

Exhibit 38: Minda Corporation: well-diversified customer base

Customer-wise revenue break-up, March fiscal year-end, 2015 (%)
Bajaj Auto, 10
Others, 16
Plastal, 2 After market, 10

BMW, 2
Hero MotoCorp, 2
Audi, 2
Yamaha, 8
Tata Motors, 2
Nissan, 3
Daimler, 3
M&M, 7
Ashok Leyland, 4
Escorts, 5 Maruti Suzuki, 7

TVS, 5 Volkswagen, 6
HMSI, 6
Exhibit 39: Two-wheeler is the largest segment for the company

Revenue break-up by end-user markets, March fiscal year end, 2015 (%)
Replacement, 11.0
Commercial veicles 2/3 Wheelers, 39.0

(CVs), 18.0
Passenger vehicles
(PVs), 32.0
Update on changes in company structure over the past few years

Prior to 2011, apart from the standalone business (two-wheeler locksets and die-casting
business), only Minda KTSN Plastic Solutions were part of the listed entity, Minda
Corporation. All other business entities such as Minda Sai, Furukawa JV, etc. were directly
held by the Ashok Minda Group. Over the past five years, Minda Group has made
considerable efforts to simply the organization structure. As part of the exercise, Minda
Corporation has acquired most of the key companies of the group. Valuation details for all
the transactions are not available but valuation of recent transactions such as Minda
Furukawa JV appear reasonable to us.
Post these transactions, only two key entities with combined FY2015 revenues of only 1.5
bn are not part of Minda Corporation. These are (1) Minda Silca Engineering (29.7% stake
held by Minda Group) with revenues of around 1 bn and (2) UzMinda LLC (50% stake
held by Minda Group) with revenues of 0.5 bn.

Key transactions between Minda Corporation and the group
In 2011, Minda Corporation. acquired 100% stake in Minda Sai and 94% stake in its
German subsidiary, Minda Schenk. The company also acquired 50% stake in Minda
Automotive Solutions, after-market distributer of the groups products.
In 2012, company acquired the remaining 50% stake in Minda Automotive Solutions.
In 2013, Minda sold its entire stake in Minda Schenk as this entity was incurring heavy
losses.
In 2014, Minda acquired (1) 51% stake in Minda Furukawa JV and (2) 100% stake in PT
Minda Automotive Indonesia and Minda Vietnam.
In 2015, the company has acquired the groups 51% stake in Minda Stoneridge JV.
Exhibit 40: Minda Corporation: Brief history and key events
Year Event
1958 Formation of Minda group
1985 Minda Corp. commences operation under the name of Minda Switch Auto Pvt. Ltd.
1989 Commercial production started for two-wheeler locks
1994 Entry into four-wheeler locksets segment
2003 Formation of Minda SAI Ltd through merger of Sylea Automotive India Ltd. & Minda Wire links
2004 Establishment of Minda Stoneridge JV
2005 Set-up of PT Minda Automotive Indonesia
2007 Start of Minda Furukawa JV
Start of Minda Valeo JV
Start of Minda Silca JV
Acquired KTSN Plastic Solutions in Germany
2008 Acquired Schenk Plastic Solutions in Germany
Acquired Schenk Plastic Solutions in Czech
2009 Setup Minda Vietnam Co. Ltd.
Setup Minda Automotive Solutions in Uzbekistan
2010 Acquired Aksys, Plant Koengen in Germany
Acquired Tectro in Poland
2011 Kotak Private Equity acquired close to 15% stake over 2011-12
Acquired 100% stake in Minda Sai and Mayank Auto from the Group
Acquired 94% stake in Minda Schenk from the Group
Acquired 50% stake in Minda Automotive Solutions from Group
2012 Acquired remaining 50% stake in Minda Automotive Solutions from Group
2013 Sold its entire stake in Mayank Auto and Minda Schenk
2014 Acquired 51% stake in Minda Furukawa JV from the Group
Acquired 100% stake in PT Minda Automotive Indonesia and Minda Vietnam from the Group
2015 Start of Minda VAST - JV between Minda and Vehicle Access Systems Technology Llc (VAST), USA
Minda KTSN Plastic Solutions acquires a new manufacturing plant in Czech Republic.
Acquired 51% stake in Minda Stoneridge JV from the Group

Exhibit 41: Valuation of transactions between Minda Corporation and Minda Group
Minda PT Minda Minda Minda Vietnam Minda Minda

Stoneridge Automotive Furukawa Automotive Automotive Schenk Plastic
Instruments Indonesia Electric Company Solutions Solutions GmbH
Stake acquired (%) 51.0 100.0 49.0 100.0 50.0 94.0
Acquisition date Oct. 1, 2015 Feb. 15, 2014 Feb. 1, 2014 Feb. 15, 2014 Apr. 3, 2012 Oct. 11, 2011
Cost of investment (Rs mn) 649 373 423 78 47 340
Implied valuation of the entity (Rs mn) 1,273 373 864 78 94 362
One-yr forward financials of the acquired entity (Rs mn)
Net worth 809 359 493 169 24 682
Revenues 3,136 1,064 3,038 255 1,642 7,846
Net profit 117 46 53 24 (2) 14
Valuation of the acquired entity (one-year forward)
P/B (X) 1.6 1.0 1.8 0.5 4.0 0.5
Price/Sales (X) 0.4 0.4 0.3 0.3 0.1 0.0
P/E (X) 10.9 8.1 16.4 3.2 NA 26.1
Exhibit 42: Minda Group organizational structure
Minda
Corporation
Minda
Minda KTSN, Minda Sai Minda Automotive Minda Furukawa
Management
Germany (100%) (100%) (100%) Electric (51%)
Services (100%)
Almighty Minda VAST

Minda KTSN, Minda Stoneridge
International PTE, Security Systems
Poland (100%) Instrument Ltd (51%)
Singapore (100%) (50%)
PT Minda
Minda Vietnam
Automotive,
(100%)
Indonesia (100%)
Other Group Companies:
Uz'Minda LLC
(50% by Uzbekistan Overseas Domestic
Government)
Minda Silca Engineering

(29.7% by
Minda Capital)

Exhibit 43: Promoters hold 63% stake in the company

Shareholding pattern of Minda Corporation, as of September 30, 2015, (%)
Others, 20.5
Institutional
investors, 16.4
Promoters, 63.2
Source: BSE, Kotak Institutional Equities
Exhibit 44: Minda Corporation: brief profile of board of directors
Name Position Remarks

Mr. Ashok Minda is the main promoter and he has been the Chairman of the Group since its
Ashok Minda Chairman & Group CEO inception. He is a commerce graduate from Delhi University and has been involved in the business
for more than 30 years now.
Mr. Avinash Gandhi has a graduate degree in Mechanical Engineering from Birla Institute of
Technology. During his more than 45 years of work experience; he has worked in a number of
Avinash P. Gandhi Independent Director positions with Tata Motors and has served as President of Hyundai Motors India from 1998 to
2002. Currently, he is the Non-Executive Chairman of Fag Bearings India Ltd and sits on the Board
of Hyundai Motor India, Havells India, Lumax Industries, etc.
Mr. Rakesh Chopra is a Chartered Accountant (England & Wales) and MBA from Cranfield
University, U.K. He has more than 37 years of work experience and is currently director of Bharat
Rakesh Chopra Independent Director
Gears and is also the founder member and Chairman of Indraprastha Cancer Society (Rajiv Gandhi
Cancer Hospital & Research Centre)
Mr. Sunil Behari Mathur is the Chairman of National Stock Exchange and the Secretary General of
Life Insurance Council. He is also former Chairman of LIC of India and Administrator of SUUTI.
Sunil Behari Mathur Independent Director
Currently, he serves on the Board of ITC, ILFS, Ultratech Cement, DCM Shriram Industries, IDFC
Trustee Company, Hindustan Oil Exploration Company Limited, and Havells India.
Mr. Ashok Jha, an IAS officer (1969 batch) has a graduate degree in Economics from St.
Stephen`s college and a Masters degree in Development Economics from the Australian National
Ashok Kumar Jha Independent Director
University, Canberra. During his stint in the civil services, he has served as the Finance Secretary of
to the Government of India. He has also served as President of Hyundai Motors India Limited.
Mr. Laxman Ramnarayan is the nominee director appointed by Kotak Private Equity. He holds
Director - Kotak Private
Laxman Ramnarayan various academic and professional qualifications including CWA and MMS. Currently he is also the
Equity
Director and audit committee member of Mahindra Aerospace and Mahindra Aero Structures.
Mrs Thankom Mathew is a post graduate in Chemistry and has over 30 years of experience and
specialises in the fields of marketing, finance, underwriting, administration and audit. She is a
Thankom T Mathew Independent Director
former Executive Director of the LIC of India and currently also a nominee director on the board of
Alok Industries
Mr. Sudhir Kashyap is a mechnical engineer and an MBA graduate from Indian Institute of
Sudhir Kashyap Executive Director & CEO Management, Ahmedabad. He has over 25 years if experience in suto component industry and has
been associated with Minda Group for over 12 years.

APPENDIX 2: PRODUCT PORTFOLIO

Exhibit 45: Minda Corporation: Product portfolio
Minda Stoneridge

APPENDIX 3: CUSTOMERS ACROSS DIFFERENT SEGMENTS

Exhibit 46: Minda Corporation: Major customers across different business segments
2/3 Wheelers
Passenger vehicles
Commercial vehicles
Agricultural vehicles
Offroad vehicles
Others

"I, Nishit Jalan, hereby certify that all of the views expressed in this report accurately reflect
my personal views about the subject company or companies and its or their securities.
I also certify that no part of my compensation was, is or will be, directly or indirectly, related
to the specific recommendations or views expressed in this report."

Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships
Percentage of companies covered by Kotak Institutional
70%
Equities, within the specified category.
60%
Percentage of companies within each category for which Kotak
Institutional Equities and or its affiliates has provided
50%
investment banking services within the previous 12 months.
40% 35.9% * The above categories are defined as follows: Buy = We

expect this stock to deliver more than 15% returns over the
30.6%
next 12 months; Add = We expect this stock to deliver 5-15%
30%
returns over the next 12 months; Reduce = We expect this stock
to deliver -5-+5% returns over the next 12 months; Sell = We
20% 17.6% expect this stock to deliver less than -5% returns over the next
15.9%
12 months. Our target prices are also on a 12-month horizon
basis. These ratings are used illustratively to comply with
10%
4.7% applicable regulations. As of 30/09/2015 Kotak Institutional
0.6% 1.2% 0.0% Equities Investment Research had investment ratings on 170
0% equity securities.
BUY ADD REDUCE SELL
Source: Kotak Institutional Equities As of September 30, 2015
Minda Corp (MDA IN)

Kotak Institutional Equities rating and stock price target history
120 35,000
30,000
100
25,000
80
20,000
60
15,000
40
10,000
20
5,000
Stock Price
- 0
Apr-13
Sep-13
Apr-14
Apr-15
Sep-15
Aug-14
Aug-15
Jul-13
Feb-14
Feb-15
Jul-14
Jul-15
Mar-13
Oct-13
Oct-14
Nov-12
Jun-13
Nov-14
Nov-15
May-14
May-15
Dec-12
Jan-13
Dec-13
Jan-14
Jan-15
Index
Price
Source: Kotak Institutional Equities Research for ratings and price targets, Bloomberg for daily closing prices.
Rating Covered by Nishit Jalan

Price target Not covered by current analyst
X Price target removal BSE-30 Index (RHS)
The price targets shown should be considered in the context of all prior published Kotak Institutional Equities research, which may or may not
have included price targets, as well as developments relating to the company, its industry and financial markets
Analyst coverage
Companies that the analyst mentioned in this document follow
Covering Analyst: Nishit Jalan
Company name Ticker
Amara Raja Batteries AMAR.BO
Ashok Leyland ASOK.BO
Bajaj Auto BJAT.BO
Bharat Forge BFRG.BO
Eicher Motors EICH.BO
Exide Industries EXID.BO
Hero Motocorp HROM.BO
Mahindra & Mahindra MAHM.BO
Mahindra CIE Automotive MAHN.BO
Maruti Suzuki MRTI.BO
Minda Corp. MDA IN
Motherson Sumi MOSS.BO
Suprajit Engineering SUPE.BO
Tata Motors TAMO.BO
Wabco India WABC.BO
Source: Kotak Institutional Equities research

Disclosures
Ratings and other definitions/identifiers

Definitions of ratings
BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
ADD. We expect this stock to deliver 5-15% returns over the next 12 months.
REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.
SELL. We expect this stock to deliver <-5% returns over the next 12 months.
Our target prices are also on a 12-month horizon basis.
Other definitions
Coverage view. The coverage view represents each analysts overall fundamental outlook on the Sector. The coverage view will consist of one of the following designations:
Attractive, Neutral, Cautious.
Other ratings/identifiers
NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s) and/or
Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction involving this company
and in certain other circumstances.
CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.
NC = Not Covered. Kotak Securities does not cover this company.
RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient fundamental
basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied
upon.
NA = Not Available or Not Applicable. The information is not available for display or is not applicable.
NM = Not Meaningful. The information is not meaningful and is therefore excluded.

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The Research Report is only for reference purposes for residents

in India, but not for the purposes of advising or recommending

Initiate with BUY rating and target price of `110

Company data and valuation summary

Company data Stock data High Low Price performance 1M 3M 12M

Minda Corporationfinancial snapshot ..................................................... 3

Valuations: Decent growth story at reasonable valuations .......................... 4

Key risks: Inefficient capital allocation and weak execution ....................... 17

Financials: Growth led by market share gains ........................................... 19

Appendix 1: Company profile ................................................................... 28

Appendix 2: Product portfolio .................................................................. 34

Appendix 3: Customers across different segments.................................... 35

2 KOTAK INSTITUTIONAL EQUITIES RESEARCH

MINDA CORPORATIONFINANCIAL SNAPSHOT

Net sales EBITDA PAT EPS EV/EBITDA P/E RoACE RoAE

Source: Company, Kotak Institutional Equities estimates

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

VALUATIONS: DECENT GROWTH STORY AT REASONABLE VALUATIONS

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 3: Minda Corporation trades at 14.3X FY2017E EPS

Price Market cap. P/E (X) EV/EBITDA (X)

Source: Bloomberg, Kotak Institutional Equities estimates

DCF implies a fair value of `110

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

Exhibit 4: We value Minda Corporation at 110 on DCF basis

After tax cost of debt (%) 7.7

Source: Bloomberg, Kotak Institutional Equities estimates

Market leadership in several segments. Minda Corporation is the market leader in

Strong relationship with OEMs offers opportunities to increase content per

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Key catalysts that would drive stock performance

Further simplification of corporate structure. We believe that Minda has made

Exhibit 5: Minda Group organizational structure

Almighty Minda VAST

Other Group Companies:

Minda Silca Engineering

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

Exhibit 6: We expect Minda to deliver 20% revenue CAGR over FY2016-20E

Revenue CAGR (%)

Source: Company, Kotak Institutional Equities estimates

8 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Year of Minda's stake Royalty

(1) Potential market share gains in two-wheeler

(1) Access to superior technology for four-wheeler

Source: Company, Kotak Institutional Equities

Minda Furukawa JVstrong relationship with Japanese OEMs

Furukawa Electric is a Japanese conglomerate engaged in electric and electronics equipment

KOTAK INSTITUTIONAL EQUITIES RESEARCH 9

Exhibit 8: Overview of automotive product offerings of Furukawa Electric

Source: Company, Kotak Institutional Equities

(JPY bn) Electronics and Automotive Systems Total revenues

Source: Company, Kotak Institutional Equities

10 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Key potential growth areas for Minda due to this JV are:

Minda Stoneridge Instrumentsinstrument clusters and sensors

32% 47% 21%

Stoneridge Electronics Stoneridge Control Devices PST Eletrnica (JV, Brazil)

Driver Information Systems Switches & Actuators Electronics

Minda Stoneridge Instruments

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 11