Reduce UNO Minda Ltd For Target Rs. 1,215 By Choice Institutional Equities
Strategic Investments in Future Mobility and Safety: UNOMINDA is strategically focussed on capturing growth in emerging technologies, particularly in Electric Mobility and Safety. In the EV segment, UNO Minda is executing its strategy through its joint venture with Inovance for high voltage EV power train components. This greenfield facility is on schedule for commissioning in Q2FY27, positioning the company for growth in core EV systems. The airbag manufacturing joint venture (TG MINDA) is a key driver, posting 28% YoY revenue growth in Q2FY26. This growth is structurally supported by rising OEM demand for airbags in line with regulatory and safety requirements. We believe UNOMINDA is well-positioned to capitalise on structural tailwinds from premiumization and electrification in the auto components sector. It will be supported by strategic investments in high-growth areas, thereby enhancing long-term growth visibility.
View and Valuation: We revise our FY26/FY27 EPS estimate downwards by 4.2%/1.8% and maintain our target price at INR 1,215. We value the company at 40x (maintained) on the average of FY27/28E EPS and maintain our REDUCE rating on the stock. While we remain positive on the company’s long-term growth prospect, we maintain our rating, given the current valuations and limited upside potential from the present level.
Q2FY26 results: Lower as compared to estimate
* Revenue was up 13.4% YoY and up 7.2% QoQ to INR 48,140 Mn (vs CIE est. at INR 49,240 Mn).
* EBITDA was up 14.4% YoY and up 1.6% QoQ to INR 5,518 Mn (vs CIE est. at INR 5,958 Mn). EBITDA margin was up 10 bps YoY and down 64 bps QoQ to 11.5% (vs CIE est. at 12.1%).
* APAT was up 27.4% YoY and up 4.6% QoQ to INR 3,040 Mn (vs CIE est. at INR 3,266 Mn).
Proactive Capacity Ramp-up to Support Demand and Competitiveness:
UNOMINDA is actively pursuing significant capacity expansion and operational efficiency improvement to support its future growth trajectory. The company has approximately 10 ongoing expansion projects across multiple plants. Several of these projects are expected to become operational in the current financial year, including Phase 1 of the four-wheeler plant at Kharkhoda, the lighting manufacturing facility in Indonesia and a new die-casting facility. High capital expenditure associated with these new ventures has put pressure on margin in the near term. However, we believe, these strategic investments in infrastructure are essential for meeting anticipated demand and sustaining the company’s competitive edge.
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SEBI Registration no.: INZ 000160131
