Minda Corporation has received BUY recommendation from Deven Choksey Institutional Research, supported by a comprehensive Q1FY26 earnings report signaling substantial growth and strategic momentum. The firm has set a price target of Rs 596, implying a potential upside of 15.3% from the current market price of Rs 517. The auto ancillary sector player delivered impressive top-line growth driven primarily by its Information and Connected Systems segment, alongside ongoing capacity expansions and a promising electric vehicle (EV) order pipeline. Despite margin pressures due to elevated finance costs and depreciation, the medium-term outlook remains optimistic on rising EV penetration, export traction, and strategic joint ventures. Below is a detailed analysis of the results, business segments, and forward-looking valuation metrics.

Strong Q1FY26 Performance Exceeds Expectations

Minda Corporation posted consolidated revenue of Rs 13,859 million for Q1FY26, registering a healthy 16.2% year-over-year increase and a 4.9% quarter-over-quarter uplift. This performance surpassed estimates by 5.7%, reflecting robust order execution and heightened customer demand, specifically in the Information and Connected segments. EBITDA rose 18.6% YoY to Rs 1,563 million, with margins slightly improving to 11.3%, amid strategic cost initiatives and operational efficiencies. However, net profit growth was marginal at 1.7% YoY, reaching Rs 653 million, due to higher finance costs linked to acquisition-related borrowings and increased depreciation owing to rapid capacity and technology investments.

Segment-wise Dynamics Reveal Growth Engines and Challenges

Mechatronics and Aftermarket: This segment grew 13% YoY to Rs 6,500 million but saw a slight 0.6% decline quarterly, impacted by stagnant ASEAN market demand and capacity ramp-up delays in die casting units. Domestic demand for newly launched two-wheeler products provided some uplift.

Information & Connected Systems: Delivering stellar 19.3% YoY and 10.3% QoQ growth to Rs 7,360 million, this segment benefited from significant wiring harness order wins domestically and for exports. The launch of new TFT instrument clusters across two-wheeler, passenger vehicle, and commercial vehicle categories contributed robustly.

Associate Performance: Flash Electronics, an associate, reported Rs 3,760 million in revenue with a healthy EBITDA margin of 15.8%, contributing Rs 110 million as its share of profits.

Capex and Strategic Expansion Fuel Future Growth

Minda Corporation is aggressively expanding capacity and footprint, underscored by:

Commissioning a fifth die casting plant and augmenting starter motor alternator capacity for export order fulfillment.

Establishing a new instrument clusters facility and enhancing wiring harness connector localization.

Entering a JV with Japan's Toyodenso for automotive switches and controls in Noida, where production is set to commence in Q2FY27, ramping to full capacity by FY29.

Acquiring 32 acres in Aurangabad for further expansion.

Planning FY26 capital expenditure between Rs 3,500 million and Rs 3,750 million.

These initiatives aim to harness rising EV adoption, vehicle premiumization, and strategic partnerships to sustain long-term double-digit revenue growth.

Outlook and Industry Context

The Indian automobile industry posted modest 1.9% growth in Q1FY26, with passenger vehicles and commercial vehicles showing slight gains while two-wheelers remained subdued due to muted urban demand and cautious consumer sentiment. Despite short-term headwinds, Deven Choksey remains optimistic, anticipating a recovery buoyed by a strong festive season and improving rural incomes. Minda Corporation’s order book crosses Rs 13,000 million, with over 30% linked to new energy vehicles, positioning it advantageously for industry shifts toward electrification and connected technology.

Revised Earnings and Valuation Metrics

In light of higher financing costs and increased depreciation from aggressive capacity expansion, Deven Choksey has revised down its FY26 and FY27 EPS estimates by 20.9% and 13.2%, respectively, while marginally increasing revenue forecasts. Valuation is anchored at a 33x multiple on June 2027 EPS, aligning with the company's three-year average forward P/E, leading to the reaffirmed target price of Rs 596.

Stock Levels and Investment Recommendation

Current Market Price: Rs 517

Target Price: Rs 596 (implying 15.3% upside)

Price-to-Earnings (P/E) Ratio on FY27E EPS: Approximately 33x (target multiple)

Deven Choksey maintains a firm Buy rating on Minda Corporation, emphasizing its compelling growth prospects driven by expansion in EV-related products, export diversification with minimal US market exposure, and strong order backlog. The company’s CapEx deployment, coupled with innovation through over 110 patents filed, underscores its commitment to sustaining competitive advantage.

Bottomline

Minda Corporation's Q1FY26 results paint an encouraging picture amid a cautiously growing automotive sector. With strategic investments in capacity, a diversified revenue base across product lines and geographies, and clear leadership in automotive innovation, the company is positioned for sustained double-digit growth. While near-term profit margins may feel pressure from elevated costs, the medium-term earnings trajectory justifies the Buy recommendation at current valuations. For investors, targeting the Rs 596 level offers an attractive entry into a stock benefitting from the twin engines of electrification and premiumization in India’s evolving auto ancillary landscape.