UNO Minda shares rally 500% in four years; Brokerages see more steam left. Here's why

Shares of UNO Minda Ltd have delivered multibagger returns to the investors. The stock has surged about 500 per cent from its covid-19 lows around Rs 112-113 to scale Rs 667.65 mark on Monday. The total market capitalization of the company stood around Rs 37,000 crore during the session.

The auto equipment and component maker had reported a 19 per cent rise in the net profit on a year-on-year (YOY) basis to Rs 193 crore, while revenue from operations rose 21 per cent to Rs 3,524 crore in the December 2023 quarter. Ebitda for the period rose 14 per cent to Rs 380 crore in Q3FY24.

The company said its growth was higher than industry volumes, across all product segments, encompassing both established lines such as lighting, switches, and alloy wheels, as well as emerging areas like EV technology, controllers, and sensors.

Brokerage firms, including Geojit Financial Services, Hensex Securities, Anand Rath and Axis Securities are mostly positive on the stock and see more upside left in the stock. The analysts expect the multibagger counter to gain up to another 35 per cent on the back of strong order book and dominant position.

Uno Minda has been successful in outperforming across all segments with evident growth across all product lines. The company is in the process of continuous expansion of its existing product portfolio and the addition of new product lines in alloy wheels, lighting, infotainment, seating, airbags, and blow molding, said Hensex Securities.

"They have maintained a long standing relationship with OEMs. Company strives for growth and hence is rapidly executing their expansion. We believe that the UNO Minda will be a key beneficiary of the automobile sector tailwinds. We recommend 'buy' rating on the stock and value the company at 34x FY26FWD," it added with a target price of Rs 900.

Uno Minda is one of the leading manufacturers of auto components and systems with leadership across key product segments. The company has a well diversified product portfolio with marquee clientele, both globally and domestically. UNO Minda over the years has diversified across product divisions, segments and geographies and channels.

The content per vehicle has continued to grow at 10-15 per cent, and it is expected to add more components to its product portfolio. The annual order value from EV OEM is Rs 3,292 crore. Ebitda margin came in at 10.9 per cent. However, higher personal costs and low operating leverage due to capacity expansion restricted the margin upside, said Geojit Financial Services.

"We expect revenue CAGR to grow by 17 per cent over FY24E-26E, factoring in demand stability, diversification and increase in content per vehicle. We believe the stock will continue to outperform owing to its diversified portfolio and strong order wins, and value UML at 33 times FY26E EPS," it added wit a target price of Rs 792 and a 'buy' tag.

The company has manufacturing footprints in all major geographies globally that is Asia, Africa Europe and North America with steadily growing its global presence through sustained capacity additions and channel expansions. It has six acquired subsidiaries and 19 joint ventures 9 (JVs).

Anand Rathi sees premiumisation, import substitution, regulatory changes and disruptions as the key drivers for the company. "In the past, the company outpaced industry growth by over 10 per cent. Such outperformance was driven by diversifying product lines aided by global partners and market share gains" it said expecting outperformance to continue. It has a target price of Rs 760 on the stock.

Operational outperformance is likely to continue with a strong EV product portfolio, robust order book, and capacity expansion projects . With a continuing focus on capacity expansion along with strong execution capability, said Axis Securities, maintaining its buy rating on the stock with a target price of Rs 750.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.