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Uno Minda posted healthy Q2 results with outperformance vs MSIL accelerating further and logging a ~6% beat on consolidated EBITDA (margin up by 68bps QoQ to 11.4%). Uno expects healthy industry growth in the medium term, with sustained outperformance and retained margin guidance (toward the upper range of 10.5-11.5%). We expect further support for content per vehicle from order wins/execution and market share gains, though margin improvement is likely to be gradual amid ongoing capex. Our estimates are unchanged (buildin 18%/24% revenue/EPS CAGR over FY24-27E). While enhanced outperformance vs key clients is encouraging, valuations remain rich (stock trades above 1SD from LTA); we retain REDUCE, and nudge up our TP to Rs950 at unchanged multiple of 38x, rolled-over to Sep-26E PER vs Jun-26E earlier.

Healthy beat across line-items

Revenue grew 17% YoY to Rs42.5bn (above estimate), with outperformance vs key client MSIL’s revenue accelerating to ~17.7% vs 13.5% in Q1FY25. Among its divisions, Lighting (16% YoY growth) and Others, incl sensors and controllers (50% YoY growth), led the way. EBITDA rose 20% YoY to Rs4.8bn, coming in ~6% above Consensus estimate; EBITDA margin expanded by 68bps QoQ to 11.4% despite the ~50bps lower gross margin, on lower staff costs. Adjusted PAT was up 5% YoY at Rs2.5bn. Net Debt stood higher at Rs17.4bn vs Rs13.2bn in Mar-24 due to higher capex and land purchase; net debt-to-equity at ~0.3x. Per company, RoCE stood at 18.8% as of H1.

Earnings Call KTAs

1) Near-term demand schedules from customers are in line with the usual seasonality (Q3 is typically weaker than Q2, owing to annual maintenance shutdowns at OEM end); in the medium-to-long term; company remains highly optimistic about industry growth prospects, and is investing across multiple products and locations, in line with its optimism. It remains confident of continued outperformance vs the industry. 2) Strong growth in Q2 was led by the lighting segment (PV OEM indents exceeded initial expectations; sharp jump in ASP trends, eg connected long tail light ASPs can range up to Rs17-18K/unit vs Rs2.5-3K earlier), 2W and 4W alloy wheels, and sensors/controllers/ADAS (combined revenue of ~Rs3.4bn). 3) Company has been securing new business from Korean OEMs over the past few quarters, with further headroom here. 4) E2W revenue now forms ~13-14% of overall 2W revenue despite EVspecific components not being supplied yet; Uno has won new orders for hub motors and mid drive motors; it also won an order from a Japanese OEM for wall mounted chargers; is in final stages of discussion with potential customer for E-axles. 5) 2W alloy wheel industry is seeing significant capacity additions driven by import substitution; company’s recently commissioned 2mn wheels/year 2W capacity is ramping up well; does not expect undue pressure on margins due to higher competition. 6) Company has 27-28% market share in 2W Lighting and 15% in 4W Lighting; targets improving 4W market share to 20% over coming 2 years. 7) Is setting up a 4W Lighting plant in Indonesia at Rs2.1bn (Phase 1 SOP from Q4FY26); has an anchor customer with meaningful volumes here. 8) Current capacity utilization stands at 80-90% in switches, 90-95% in casting, 85-90% in 2W Lighting and over 100% in 4W Lighting. 9) Retains margin guidance (11%; +/-50bps, with bias toward the upper end). 10) Maintains capex guidance at Rs13-14bn.

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