Analysis on UNO Minda

UNO Minda Ltd. is a diverse supplier in the automotive ancillary sector, producing items like switches, horns, and lights. It holds a dominant position in the switch market, with a 67% market share. The company has seen consistent growth in content per vehicle, expected to expand its product range further. Notably, its annual order value from Electric Vehicle Original Equipment Manufacturers stands at Rs. 3,292 crore.
In Q2FY24, the company exceeded revenue expectations, achieving a 26% year-on-year growth, driven by new customer acquisitions in the two-wheeler and four-wheeler segments, as well as the introduction of new components and leveraging its existing client base. However, the EBITDA margin was 10.9%, constrained by higher personnel costs and limited operating leverage due to capacity expansion.
Despite these challenges, the company anticipates a revenue CAGR of 17% from FY24E to FY26E, considering factors like demand stability, diversification, and increased content per vehicle. Currently, UNO Minda Ltd. is trading close to its long-term historical average of 36x. Analysts believe the stock will continue to perform well due to its diversified portfolio, strong order backlog, and hence, value UNO Minda Ltd. at 33x FY26E Earnings Per Share .