Kotak Institutional Equities has downgraded Uno Minda to 'Sell' from 'Add', while also cutting the target price to Rs 970 from Rs 1,000. The brokerage highlighted concerns over a slowdown in the passenger vehicle segment, which is expected to impact growth.
Additionally, new product launches and capacity expansions are likely to put pressure on margins. Kotak also believes that the risk-reward has turned unfavourable for Uno Minda.
However, Uno Minda's multiple partnerships are set to drive content growth over the medium term, said Kotak.
In the previous session, Uno Minda's shares closed 0.4 percent lower at Rs 1,167.5. Kotak's new target price of Rs 970, set for Uno Minda, suggests a potential downside of nearly 17 percent from the current level.
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Over the past six months, Uno Minda shares have surged over 84 percent, significantly outperforming the Nifty 50, which gained 13 percent during the same period.
In August, the auto components maker, in partnership with Japan's Tokai Rika Co Ltd, announced the opening of a new manufacturing facility under their joint venture, Tokai Rika Minda India Pvt Ltd. This facility is set to produce a range of automotive components, including smart keys, shift levers, seat belts, and other products that may be required for future business expansions.
Uno Minda reported net sales of Rs 3,817.5 crore in the June quarter, marking a 23.4 percent increase from Rs 3,092.66 crore the year ago period. The company's quarterly net profit stood at Rs 199 crore, reflecting a 15.2 percent rise from Rs 172.8 crore recorded in the same period last year.
Incorporated in 1958, Uno Minda is a manufacturer and supplier of automotive solutions and systems to original equipment manufacturers.
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