Accumulate UNO Minda; target of Rs 1218: Deven Choksey

Deven Choksey's research report on UNO Minda

Uno Minda reported an operating revenue (excl. Incentive) of INR 44,201 Mn., up 15.8% YoY (-2.4% QoQ), below our estimates by 5.1%, led by weaker momentum in the Lighting and other products segment. The revenue growth was broad-based across the segments. EBITDA grew by 16.3% YoY (-10.0% QoQ), to INR 4,741 Mn., stood below our estimates, majorly driven by miss in revenue and poor operational performance. EBITDA margin stood at 10.7%, up by 5bps YoY (-90bps QoQ), majorly led by an expansion in gross margin by 29bps YoY, partially offset by increase in employee costs and other expenses. Adj. net profit stood at INR 2,217 Mn, up by 11.7% YoY (-16.7% QoQ), stood below our estimates, led by poor operational performance.

Outlook

We have rolled forward our valuation basis to Jun’27 estimates. We value Uno Minda at 47.5x Jun’27 EPS, implying a target price of INR 1,218. The stock is currently trading at 54.9x/44.9x based on FY26E/FY27E EPS estimates. We downgrade our rating from “BUY” to ‘ACCUMULATE on the stock, as we expect elevated capex, minimal immediate revenue delta from localization, and a cautious domestic demand outlook in the near term.