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Structural Growth Story Intact; Upside Potential Fully Valued in CMP

Est. Vs. Actual for Q1FY26: Revenue– INLINE; EBITDA – BEAT ; PAT – INLINE

Change in Estimates post Q1FY26

FY26E/FY27E: Revenue: 0.9%/0.6%; EBITDA: -1.1%/0.6%; PAT: -1.9%/0.2%

Recommendation Rationale

• Strategic Consolidation: Uno Minda has acquired the remaining 49.9% stake in its JV with FRIWO AG, gaining full ownership and reinforcing its position in EV power electronics. Additionally, it plans to acquire the remaining stake in its JV with Buehler Motor GmbH in the coming months. These strategic moves aim to deepen integration, enhance control over key EV motor system technologies, and position the company as a full-stack solutions provider in the electric mobility space.

• Robust Growth Across All Verticals: Uno Minda's outperformance across all segments is evident, led predominantly by the Lightning, Switches, Casting, Seatings and Other divisions (sensors, motors, and controllers), which grew 13%, 16%, 10%, 18%, and 30% YoY, respectively, in Q1FY26.

• Capex: The company has incurred a capex of ~Rs 1,650 Cr in FY25 (~Rs 1,250 Cr excluding land acquisitions in Kharkhoda, Hosur, and Bawal to support future expansions). For FY26, the company plans to spend ~Rs 1,600 Cr capex—~Rs 400 Cr for regular maintenance and the remaining for growth/investments.

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 capacity 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. In the near term, elevated capex, minimal immediate revenue delta from localisation, and a cautious domestic demand outlook temper upside potential.

Current Valuation: 36x on FY28EPS (earlier 43x on FY27EPS)

Current TP: Rs 1,100/share (previous TP: Rs 1,010/share)

Recommendation: We maintain our HOLD on the stock and recommend a BUY on dips strategy

Financial Performance: Uno Minda's Q1FY26 revenue grew by 18% YoY (Inline), driven by strong performances across all divisions. The company’s consolidated EBITDA grew by 33% YoY (Beat), primarily due to accounting for prior period state incentives, lower employee costs and higher GMs. Adjusted PAT stood at Rs 240 Cr (Inline), up 14% YoY led by higher share of profits from associates

Outlook

We remain positive about the long-term growth potential of 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 FY25–FY28E.

Valuation & Recommendation

In the near term, elevated capex, minimal immediate revenue delta from localisation, and a cautious domestic demand outlook temper upside potential. We thus value the stock at 36x on FY28EPS (earlier 43x on FY27EPS) to arrive at our target price of Rs 1,100 (earlier Rs 1,010/share), which implies an upside of 1% from the current market price (CMP). We maintain a HOLD rating on the stock and recommend a BUY on dips strategy

Key Concall Highlights

• Key operational highlights in Q1FY26: Uno Minda achieved several strategic milestones in Q1FY26 aimed at strengthening its EV and advanced technology capabilities. The company completed the acquisition of FRIWO’s stake in Uno Minda EV Systems Pvt. Ltd., including associated technologies, assets, and the R&D team. It also acquired 88 acres of land in Chhatrapati Sambhajinagar to build a strategic land bank near key auto hubs. A Rs 210 Cr capex was approved for setting up an EV-focused casting products plant at the same location. The company commenced India’s first localised camera module manufacturing at its Pune ADAS plant, with commercial supplies already underway. Additionally, Uno Minda launched EVSE products in the aftermarket, with OEM supplies expected to begin in the next 3–4 months, aligned with upcoming model launches.

• Share of Profits from associates and JVs: The share of profit in Q1FY26 stood at Rs 47 Cr vs Rs 37 Cr in Q1FY25 (and Rs 55 Cr in Q4FY25).

• Revenue mix: Revenue from Switches (25% share of consolidated revenue) in Q4FY25 stood at Rs 1,111 Cr, up 11% YoY. Lighting (23% share) grew by 13% YoY to Rs 1,013 Cr. Castings (19% share) saw consolidated revenue growth of 10% YoY to Rs 824 Cr. The Seating (7% share) division's revenue was up 18% YoY, standing at Rs 320 Cr. The Acoustic segment (4% share) declined by 8% YoY to Rs 187 Cr. Other business segments (22% share) grew by 30% YoY to Rs 996 Cr in Q1FY26. Exports contributed 11% of total revenue in Q1. Channel-wise contribution was 93% OEM and 7% Aftermarket. Segment-wise, 46% of revenues came from 2W, while 4W accounted for 47% in Q4FY25.

• Casting Division: (1) Announced capex of Rs 210 Cr for EV casting components. (2) Growth driven by commissioning of AW4W 30k line at Bawal and 2.0 Mn capacity AW2W Supa plant. (3) Capex of Rs 210 Cr for setting up casting products related to EVs. The plant would be set up at Chhatrapati Sambhajinagar. (4) First phase of Kharkhoda AW4W to commence in Q2FY26. • Switches Division: (1) Exports continue to grow, with 2W exports at Rs 68 Cr. (2) New export order from UK 2W OEM for Thailand plant.

• Seating Division: Growth driven by diversification of 2W customers and supply of suspended seats to the domestic market. However, the European vehicles business remains challenging, adversely impacting exports.

• Net Debt and Capex Plans: The company's consolidated net debt stood at Rs 2,226 Cr in Jun’25 vs Rs 2,091 Cr in Mar’25. The increase was mainly due to capex spending and land acquisitions. Despite this, the net debt-to-equity ratio remains at a healthy 0.34, reflecting strong financial stability.

Key Risks to Our Estimates and TP

• Any Black Swan events..

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