Uno Minda Shines With Increased Content Per Car And EV Focus

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Uno Minda, a key player in the auto parts industry, has demonstrated significant revenue growth, surpassing industry averages by more than double over the past five years. The company’s strong financial results in FY24, featuring a 25.2% increase in revenue and widening operating margins, have led to a 37% surge in its stock price recently. With notable expansions in its lighting and light metal technology sectors, fueled by high-end products and a push into the electric vehicle (EV) market, Uno Minda is effectively leveraging the shift towards more premium vehicle segments.

Uno Minda, a prominent supplier specializing in lighting, switching, acoustics, and seating solutions for global automobile manufacturers, has exceeded industry growth thanks to its enhanced offerings per vehicle, new product introductions, and expansion into the electric vehicle (EV) sector.

Over the last five years, the company achieved an annual revenue growth rate of 18%, nearly two and a half times the industry average. In FY24, Uno Minda reported a robust 25.2% increase in revenue, reaching INR 14,064.7 crore, and improved its operating margin (Ebitda margin) by 20 basis points to 11.3%. The stock price has climbed 37% over the last three months, including a 16% rise in just the past eight trading sessions following the announcement of its March quarter results. The company’s lighting and light metal technology (LMT) divisions, which account for nearly half of its revenue, were key growth contributors. The lighting division saw a 44% year-over-year increase in the March quarter, driven by the growing adoption of app-controlled connected tail lamps and capacity expansion. The LMT division enjoyed a 43% growth in the same period, fueled by strong demand for alloy wheels for two-wheelers and four-wheelers.

This trend towards premiumization is reflected in the substantial increase in the company’s kit value, the total value of parts supplied per vehicle. In the premium bike segment, the kit value jumped to INR 15,798 in FY24 from INR 9,231 in FY20. In the rapidly growing sports utility vehicle (SUV) segment, the kit value almost doubled to INR 2,06,466.

The annual growth rate of the company’s kit value over the past four years was 14%. An increasing kit value is advantageous for revenue growth.

Uno Minda is strategically positioning itself to capitalize on the EV market. It recently won significant orders to supply on-board chargers, battery management systems, motor controllers, and DC-DC converters, totaling INR 3,755 crore in FY24, with INR 2,510 crore from the two-wheeler segment and the remainder from passenger cars.

With a flurry of new orders, the kit value for electric two-wheelers is expected to rise to INR 35,000 in FY25 from INR 28,000 the previous year. Revenue is anticipated to continue growing due to increased content per vehicle and capacity expansion. The company plans to invest INR 1,300 crore to INR 1,400 crore this fiscal year, with about INR 2,500 crore earmarked for the coming years. With the stock closing at INR 877.5 on Monday, it is currently trading at 45.2 times one-year forward earnings, compared to a long-term average of 27 times, suggesting that it may maintain its high valuation given the promising growth outlook.

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