Target: ₹763
CMP: ₹522.90
Strong overall growth in retail off-take for automobiles in the quarter led to robust top-line performance for Uno Minda. Orders from EVs continue to build up for different products. Content per vehicle is expected to improve on the strong order-book across applications. With expected recovery in two-wheeler OEMs, we expect Q4 to be better.
Demand is strong and expected to improve, especially for two-wheelers as the rural outlook gradually improves. For EVs, it got an order with annual peak revenue of ₹300 crore to supply off-board chargers, motor controllers, BMS and DC-DC converters.
With its JV with Buehler, it received a couple of orders to supply traction motors to electric two-wheeler OEMs. For its airbag business, it has received a few large orders for curtain airbags; accordingly, its subsidiary TG Minda is expected to incur ₹175-crore capex to expand capacity at its Neemrana plant. Asset turn is about 2x, said the management. This augurs well for long-term growth.
However, we believe the domestic business would aid margins as raw material prices go down; accordingly, we expect operating leverage-led margin expansion.
We expect a 26 per cent revenue CAGR over FY23-25, and 38 per cent in earnings, leading to EPS of ₹21.8.
Risks: Less-than-estimated growth in OEMs.