Stocks to Buy in 2022: Minda Industries stock remains preferred EV play despite 160% rise in 2021

Minda Industries more than doubled investors’ wealth in 2021 and remains to a preferred Electric Vehicle (EV) play for the year 2022, explains experts.

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The company with a market capitalisation of more than Rs 29000 cr rallied from the low of Rs 398 recorded on 31 December to Rs 1047 on 17 December which translates into an upside of 163 per cent so far in the year 2021.

Minda Industries is into supplying automotive solutions to original equipment manufacturers since 1958. It has 71 manufacturing plants in India, Indonesia, Vietnam, Spain, Morocco, Mexico, Colombia, Germany, and design centres in Taiwan, Japan and Spain. It also has sales offices in North America, Europe and ASEAN countries.

Earlier this month, the firm signed a joint venture agreement with Germany-based `FRIWO AG` to further accelerate its electric vehicle products initiatives, to combine their manufacturing prowess and technical expertise to manufacture and supply various electric vehicle components in the Indian subcontinent.

The German company deals in power supply devices and e-drive solutions. Minda Industries will hold a majority stake of 50.1 percent in the joint venture entity, IANS said in a report.

With a strategy of accelerating its growth through JVs and tie-ups with global players, Minda has been successful in tapping emerging opportunities by launching new technology products and premiumizing its offerings, suggest experts.

“Minda is establishing itself as a dominant player in the EV supply chain as well and its position is likely to tighten due to the potential doubling of its kit value on the back of the JV with FRIWO AG Germany,” Yesha Shah, Head- Equity Research, Samco Securities Ltd, said.

“Multiple growth drivers in play and strong revenue visibility, make it a keeper in an investor’s portfolio. While the stock is expected to trade at an elevated multiples, the current valuation is expensive and offers low margin of safety for fresh investments,” added Shah.

Axis Securities maintains its Hold rating on Minda Industries with a 12-month target of Rs 1000. The company has been outpacing the industry growth on account of an increase in kit value per vehicle in both 2W/4W segments through the introduction of new products, both on the mechanical and technology sides.

“Given its success in developing import substitution products, the company is well-placed to capture the business opportunities in the Auto sector. We continue to like Minda Industries as a play on Auto, especially with rising electrification and premiumization,” added the report.

Having an EV agnostic product portfolio with significant potential to gain in EVs due to new product development will be a key long-term driver for the company. Axis Securities have fine-tuned our FY22/23E estimates and introduced FY24E estimates.

Technical Check:

Expert: Mehul Kothari is AVP – Technical Research at Anand Rathi Shares & Stock Brokers

The weekly chart of Minda Industries depicts that the stock is trading in a strong uptrend and also it is following a rising channel. At this point in time, it is trading close to the 1100 mark which is the upper end of the rising channel.

It is possible that the stock might enter some kind of consolidation. Thus, for traders it is better to avoid buying when it reached near 1100 mark.

Investors can continue to hold the stock since it has not confirmed any signs of reversal. On the downside, supports are placed at 920 and 850.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)