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Uno Minda in Q1FY25, reported a lower than expected performance. Revenue during the quarter, saw a growth of 23.4% YoY to Rs.38.175bn vs est of Rs.39.84bn. Healthy top line growth was backed by strong growth in the switch and lighting segment which saw a growth of 14% and 26% respectively on yearly basis. Switch business growth was supported by export order in the 2W segment. Other segment which saw a growth of 68% YoY basis was largely driven by consolidation of Minda Westport during the quarter. Gross profit up by 22.7% YoY to Rs.13.57bn. EBIDTA margin for the quarter remained largely flat on yearly basis to 10.7% vs (est of 12.4%) due to sharp jump in employee cost which grew by 21.8% YoY. PAT for the quarter jumped by 15% YoY to Rs.2bn. Management expects in FY25 revenue to grow better than industry with margin in the range of 11-11.5%. During the quarter the company also announced plans to foray into sunroof mfg. from Q4FY27. Company has made a TLA with Aisin Corporation, Japan and earmarked the investment of Rs.62.5cr.

? In alloy wheel, to meet growing demand, the company is expanding the Bawal facility by an additional 30,000 capacities, scheduled for commissioning in Q2FY25, also securing land for another 30,000 capacity expansion in Bawal, with the implementation work to commence shortly. Construction of a new 120,000 wheel-per-month greenfield plant at IMT Karkoda is progressing as planned.

? Positive shift in Alloy wheel and Lighting: Company is adding up new greenfield capacity in 4W alloy wheel in addition to Bawal and Pune (2W alloy wheel) and 4W lighting in Vietnam and Pune. In alloy wheel overall penetration in 4W segment in India is around 40-45% vs global penetration of 90-95%, management expects penetration in India to reach 70-75% over next 5-7 years resulting in 3-4x growth. In lighting segment Management anticipates further revenue improvement in this segment in the upcoming quarters, driven by the commencement of production for a new customer from Pune plant and intend to increase segment revenue share from current ~14-15% to 19-20% over next 4-5 years. In the EV segment, the company further increases its presence in EV component supply by signing TLA with StarCharge for 4W-home EV charging. Casting segment is also on healthy growth phase, driven by several factors: increasing penetration of alloy wheels in both the 2W and PV, rising demand for alloy wheels in the replacement sector, and capacity expansion currently company have 10% market share in 2W alloy and aiming to reach to 16% in coming year and in PV current market share is around 45%.

View and Valuation: UNO Minda is focusing on high-growth auto components like Alloy wheel, LED lighting, Sensors, ADAS, EV chargers, Sunroof and other premium components. To meet the changing dynamic of the automotive industry, the company is aggressively expanding its capacity in the various product categories like Alloywhheel, Lighting, switches, seat belts and smart switches. We expect UNO Minda to see healthy revenue growth in the coming years backed by increasing KIT value by adding more premium and high growth products, increasing SOB with clients and adding capacity expansion. We reiterate our BUY rating on the stock with a TP of Rs. 1122, (45x of FY26E EPS).

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