6594: Governance Reforms And Business Reorganization Will Ultimately Unlock Upside Potential

Analysts have trimmed their Nidec price target from ¥3,700 to ¥3,500, pointing to a slightly higher discount rate and modestly lower future P/E expectations, even as revenue growth and profit margin assumptions remain relatively steady.

What's in the News

• Nidec plans to postpone the disclosure of financial results for the fiscal year ended March 31, 2026, while it works on corrections to financial statements for the fiscal year ended March 31, 2022 and subsequent years, following a third party investigation into inappropriate accounting treatment. A new disclosure date has not yet been determined (company announcement).
• The company has resolved not to pay a year end dividend for the fiscal year ending March 31, 2026, after a third party committee reported findings of inappropriate accounting treatment that may have a material impact on prior year financial results. This contrasts with a ¥20 per share year end dividend for the fiscal year ended March 2025 (company announcement).
• Board meetings held on March 3 and March 13, 2026 addressed the potential suspension of the year end dividend and the establishment of an Executive Responsibility Investigation Committee. These meetings highlight an ongoing governance and oversight response to the accounting issues identified (board meeting disclosures).
• Effective April 1, 2026, Nidec plans to integrate its Traction and Inverter Business Groups into a single Traction Business Group, with new research, project management, and business accounting structures, and to reorganize several R&D and finance departments (business reorganization filings).
• The company intends to dissolve the Kyoto Development Center and several related departments, and to dissolve the Sales Administration Department under the Business Strategy and Sales Division, with additional plans to dissolve the Special Investigation Support Office effective May 1, 2026 (company restructuring announcements).

Valuation Changes

• Fair Value: Price target reduced from ¥3,700 to ¥3,500, reflecting a modest recalibration of estimated equity value.
• Discount Rate: Discount rate assumptions increased slightly from 8.03% to 8.27%, indicating a higher required return in the valuation model.
• Revenue Growth: Long term revenue growth assumption adjusted from 6.27% to 6.33%, keeping expectations broadly stable.
• Net Profit Margin: Profit margin assumption moved from 8.73% to 8.78%, indicating only a very small change in expected profitability.
• Future P/E: Future P/E multiple trimmed from 19.51x to 18.43x, pointing to a more conservative view on valuation multiples applied to earnings.