Uno Minda's seating, sunroof and lighting wins support growth as new capacities ramp

Investment View and Valuation

Motilal Oswal Financial Services maintains a Buy rating on Uno Minda with a target price of Rs 1,406, compared with the current market price of Rs 1,227. The recommendation is supported by broad-based growth, expansion into new automotive components and the ramp-up of recently announced projects.

The broker describes FY27 as a defining growth year, with seven of Uno Minda's 11 new projects expected to be operational or in ramp-up during FY27, in addition to two plants commercialised in Q4 FY26.

Q1 FY27 Financial Performance

Uno Minda reported consolidated Q1 FY27 revenue of Rs 5,557 crore, up 23.8 per cent year on year and 3.3 per cent above Motilal Oswal's estimate. Growth was broad based across the company's businesses.

Green Mobility represented 10 per cent of consolidated revenue in Q1 FY27. Profitability was affected by raw-material cost inflation and wage revisions. Gross margin contracted 350 basis points year on year to 23.3 per cent, while EBITDA margin declined 180 basis points to 10.3 per cent, below Motilal Oswal's 10.8 per cent estimate.

EBITDA grew 5.3 per cent year on year to Rs 572 crore and was broadly in line with estimates. Adjusted profit after tax rose 1.8 per cent to about Rs 304 crore, also broadly in line with estimates. Management reiterated FY27 EBITDA margin guidance of 11 per cent plus or minus 50 basis points and capex guidance of about Rs 1,750 crore.

New Orders and Capacity Expansion

Lighting and Alloy Wheels

Management expects meaningful market-share gains in two-wheeler lighting, supported by earlier order wins with annual peak revenue potential of about Rs 450 crore. Uno Minda secured its first business nomination from a global OEM in domestic passenger-vehicle lighting, while interior ambient lighting has begun gaining commercial traction.

The Indonesia four-wheeler lighting facility secured a second customer order, with start of production expected in Q2 FY28. In alloy wheels, the Kharkhoda 60,000 wheels-per-month line is expected to be fully ramped up from Q2 FY27, followed by an additional 30,000 wheels-per-month capacity in H2 FY27. Four of six planned Bawal two-wheeler alloy-wheel lines are expected to start in H2 FY27, adding about 1 million units of annual capacity.

Seating and Sunroof

The seating business has export orders from three new European and North American customers with annual peak revenue potential of about Rs 380 crore. Uno Minda entered passenger-vehicle seating through its Tachi-S joint venture and has won an anchor-customer order.

The company is building a Chhatrapati Sambhaji Nagar plant with capex of Rs 320 crore. The facility is expected to achieve asset turnover above 2 times, with operations expected to begin from Q2 FY28.

The sunroof order book exceeds Rs 500 crore following an additional panoramic-sunroof order with annual peak revenue potential of Rs 130 crore and an electric roller-shade order worth Rs 40 crore. Production is expected to begin from the end of FY27.

Growth Outlook

Motilal Oswal expects Uno Minda to deliver FY26-28 compound annual growth of 19 per cent in revenue, 20 per cent in EBITDA and 23 per cent in adjusted PAT. The broker expects returns to improve in FY28E as new capacities ramp up.

The growth thesis is supported by premiumisation, rising feature content, safety and emissions regulations, and electric-vehicle adoption. These factors are expected to increase content per vehicle across Uno Minda's segments.

Motilal Oswal values Uno Minda at 45 times FY28E earnings per share to derive a target price of Rs 1,406.

Key Risks and Monitorables

• Commodity and wage inflation was a near-term pressure evident in Q1 FY27 and affected gross and EBITDA margins.
• The growth outlook depends on the timely commissioning of projects and successful capacity ramp-up.
• Conversion of new order wins into expected revenues remains important to the investment thesis.