Rs 383 to Rs 1,058: This multibagger stock delivered over 150% return in one year

Shares of Minda Industries Limited have delivered a multi-bagger return to its long-term investors. In the past one year, the share price jumped from Rs 383 to Rs 1,058 mark -- logging around 176 per cent return in this period.
 
The stock rose 12 per cent to hit an all-time high of Rs 1058.7 on the Bombay Stock Exchange (BSE) on Monday. It has been gaining after the company announced that it has entered into a Joint Venture agreement with FRIWO AG Germany, a leading international manufacturer of innovative power supply units and e-drive solutions, to combine their manufacturing prowess and technical expertise to manufacture and supply various electric vehicle components in the Indian subcontinent.
 
Minda Industries Ltd will hold a majority stake of 50.1 per cent in the joint venture entity.
 
The company expects a surge in two-wheel electric vehicles over the next 5-6 years in India. While joint venture plans to incur capex of Rs 390 crore over the next 6 years to support such growth in India, the outlay in the initial two years would be around Rs 160 crore.
 
Minda Industries plans to invest Rs 71 crore in one or more tranches as an equity investment to partly fund the above expenditure. The remaining funding requirement will be met through a mix of internal accruals, equity investment and debt.
 
Long-term investors have made big gains by investing in this stock as it has surged over 860 per cent in the last five years and zoomed over 9,000 per cent in the last ten years.
 
Should you buy, sell or hold?
 
"Minda industries did see some drag in margins due to rising inflation in commodity prices and higher staff costs but we believe MIL will continue its outperformance led by its ability to launch new product lines such as seating, sensors, LED lights etc, which has helped the company increase its market share in OEMs across segments, new order wins from Korean and Japanese OEMs and foray into EV-specific products for 2Ws/3Ws to gain significant market share (~30%) in the long term. Recent JV with FRIWO AG Germany is a great step in this direction," Divam Sharma, Founder, Green Portfolio told BusinessToday.in.
 
"We believe the company will see good revenue growth (20%+) over the next 2 years along with an increase in operating profit margins (13 per cent +) and hence remain positive on the stock," he noted.
 
"Currently, the stock is trading at a PE of ~35x FY23E EPS based on our estimates, which is premium to other auto ancillary companies but we believe the company will sustain a high valuation going forward as well and can deliver 20 per cent upside in a year or so," Sharma added.
 
Q2 earnings
 
Minda Industries Limited posted a consolidated net profit of Rs 113 crore for the quarter ended September 2021 against a net profit of Rs 100 crore in the year-ago period.
 
Revenue from operations rose to Rs 2,114 crore in the second quarter of this fiscal year, up 30 per cent on a year-on-year basis.