Buy UNO MINDA Ltd For Target Rs. 1,140 by Axis Securities
Expect Operational Outperformance to Continue
Est. Vs. Actual for Q3FY25: Revenue–BEAT; EBITDA – BEAT ; PAT – BEAT
Change in Estimates post Q3FY25
FY25E/FY26E: Revenue: 0.0%/0.1%; EBITDA: -1.3%/0.1%; PAT: -5.6%/-2.2%
Recommendation Rationale
* Operational Highlights in Q3FY25: (1) Uno Minda began commercial production at an advanced manufacturing facility at Khed city for 4W Lighting commissioned in Q3FY25. (2) NCLT approves the merger of Minda Kosei, Kosei Minda and Kosei Minda Mould into Uno Minda Ltd. (3) The company’s board approved Capex for expansion of the Casting facility at Hosur from 11kMT per annum to 15kMT per annum.
* Robust Growth Across All Verticals: UnoMinda's outperformance across all segments can be witnessed, led predominantly by the Lightning, Switches, Casting, and Other divisions (sensors, motors-controllers), which grew 15%/13%/12%/60% YoY respectively in Q3FY25.
* EV Capabilities: Sales of 2W EVs rose to Rs 238 Cr in Q3FY25, compared to Rs 164 Cr in Q3FY24, driven mainly by higher volumes of sensors and controllers. The potential EV kit value is estimated at Rs 35k, with Rs 27k currently in commercial production.
Company Outlook & Guidance:
The company expects steady revenue growth driven by capacity expansion, new product launches, and OEM partnerships. EBITDA margins are projected to improve over the next few years, supported by cost optimisation and higher utilisation. The company’s ongoing capacity expansion initiatives, coupled with a robust order book, position it to outperform industry growth rates in the near to medium term.
Current Valuation: 43x on FY27EPS (earlier 41x on FY27EPS)
Current TP: Rs 1,140/share (previous TP: Rs 1,090/share)
Recommendation: We maintain our BUY rating on the stock.
Financial Performance: Uno Minda's Q3FY25 revenue grew by 18.8% YoY but declined 1.4% QoQ (4% beat), driven by strong performances all divisions. The company’s consolidated EBITDA grew by 20.4% YoY but was down 5.3% QoQ (3.2% beat), with EBITDA margins improving to 10.9%, up 15 bps YoY but down 44 bps QoQ, primarily due to higher capacity utilisation and sustained cost reduction efforts. Adjusted PAT stood at Rs 254 Cr, up 24% YoY but down 4.4% QoQ (10% beat). The EBITDA outperformance was supported by increased other income but was partially offset by higher-than-expected interest, depreciation, and higher share of minority interest.
Outlook: We remain positive about Uno Minda as a play in the auto sector, driven by new product introductions, premiumisation trends, ongoing capacity building to meet industry demand, and a strong EV order book. Capacity expansion projects, the benefits of which are expected to materialise in H2FY26 and beyond, further support growth. We forecast a Revenue/EBITDA/PAT CAGR of 15%/17%/24% over FY24-FY27E.
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