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Steady performance in a tough macro Entry into new segments to open up significant growth avenues

* Uno Minda’s (UML) 1QFY27 earnings at INR3b came in line with our estimates. EBITDA margin contracted 180bp YoY to 10.3% (vs an estimate of 10.8%), primarily due commodity cost inflation and wage revision impact. Revenue grew ~24% YoY to INR55.6b and beat our estimates, driven by broad-based growth across segments.

* Management expects FY27 to be a defining growth year for the company, as seven of its 11 new projects will be operational or in a ramp-up phase in FY27. This is in addition to the commercialization of two new plants in 4QFY26. Some notable breakthroughs achieved in 1Q include:

1) entry into the PV seating business

2) another order win in sunroofs

3) increasing customer traction for ambient lighting

4) new order from a global OEM for PV lighting. Overall, we expect UML to post a healthy CAGR of 19%/20%/23% in revenue/EBITDA/PAT over FY26-28. Returns are expected to rise in FY28 following the ramp up of new capacities. Overall, we value UML at 45x FY28E EPS to arrive at a TP of INR1,406 per share and maintain our BUY rating on the stock

1Q earnings in line with estimates

* UML’s consolidated 1QFY27 revenue came in line with our estimate, growing 23.8% YoY to INR55.6b. Growth was broad-based across its core product segments, led by Castings at 32%, followed by Seatings at 28% and Green Mobility at 78%.

* Gross margin contracted 350bp YoY to 23.3%, primarily due to RM cost inflation.

* This, coupled with wage inflation, resulted in EBITDA margin coming in slightly below our estimate at 10.3% (estimated 10.8%). EBITDA grew 5.3% YoY to INR5.7b (in line with estimate).

* Adj. PAT grew 1.8% YoY to ~INR3b and was broadly in line with our expectations.

Valuation and view

Management expects FY27 to be a defining growth year for the company, as seven of its 11 new projects will be operational or in a ramp-up phase in FY27. This is in addition to the commercialization of two new plants in 4QFY26. Some notable breakthroughs achieved in 1Q include:

1) entry into the PV seating business,

2) another order win in sunroofs,

3) increasing customer traction for ambient lighting

4) new order from a global OEM for PV lighting. Overall, we expect UML to post a healthy CAGR of 19%/20%/23% in revenue/EBITDA/PAT over FY26-28. Returns are expected to rise in FY28 following the ramp-up of new capacities. Overall, we value UML at 45x FY28E EPS to arrive at a TP of INR1,406 per share and reiterate our BUY rating on the stock

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