This Midcap Auto Ancillary Stock Zoomed 188.2% In 3 Years, Axis Securities Says Buy

Leading brokerage firm UNO Minda has assigned a "buy" rating to UNO Minda Limited with a target price of Rs 571 apiece to the stock. If you buy the stock at the current market price, it is likely to give a return of up to 10% on investments. UNO Minda is a midcap Auto Ancillary company. It has a market capitalisation of Rs 30,168.51 crore.

Stock Outlook & Returns

The stock of UNO Minda last traded at Rs 526.90 apiece on NSE. The stock recorded its 52 week high on 10 January 2022 at Rs 1,244.70 apiece and the 52 week low recorded on 7 July 2022 at Rs 494 apiece, respectively.
In the past 1 month the stock moved down by 5.28%, and in the past 3 months, moved down by 5.3%, respectively. The stock moved down by 12.53% in the past 1 year. Over the past 3 years, it gave a 188.2% multibagger return and in the past 5 years, it gave 152.25% multibagger returns, respectively.

 

Diversified Product Portfolio

The company is well-diversified with an ICE-EV agnostic product portfolio and is constantly increasing kit value, leading to higher wallet share with existing and potential clients. Its divisions namely Switches, Lightning, and Casting form 28%, 23%, and 21% share of its overall revenue respectively and have posted impressive growth of 23%, 45%, and 92% YoY in Q2FY23. These divisions are operating at optimum capacity levels and the company has announced a key Capex growth pipeline to meet incremental demand.

Growth Capex Pipeline

Medium to long-term growth drivers gets further boost with key announcements in Q2FY23 (1) Two new JVs, one with Buehler (50.1% stake, Rs 110 Cr Capex) for the BEV traction motors, and the other with Tachi-S (51% stake) which forays UNO now in the 4W seating system. (2) Expansion of the Lighting (Capex: Rs 400 Cr) and Alloy wheels (Rs 190 Cr) capacity to fulfil additional orders as the company made significant inroads with new OEMs. (3) The total Capex pipeline now stands at Rs 1,664 Cr (FY23 Capex guidance at Rs 700 Cr). (4) It has entered into a Technical License agreement with Asentec Co (Asentec) of Korea, a leading global supplier of Automotive sensors and actuators to design, develop, manufacture, and market wheel speed sensors in India.

Potential EV Kit value

EV Kit value has grown to Rs 61,300/vehicle (earlier Rs 56,300/vehicle in Q1FY23) from existing products under production and supply at Rs 27,300/vehicle. The company has already received orders for products worth Rs 3,000/vehicle while Rs 31,000/vehicle orders are under discussion with potential customers. The company's product portfolio is well insulated from any foreseeable market disruptions with an ICE-EV agnostic product portfolio and constantly increasing kit value, leading to higher wallet share with existing and potential clients.

Outlook & Valuation

Axis Securities said, "On the back of these growth drivers and strong order books, we forecast Revenue/EBITDA/PAT CAGR of 22%/27%/42% over FY22-25E. We recommend a BUY rating on the stock with a target price of Rs 571/share, implying a 10% upside from the CMP."

About The Company

UNO MINDA is a leading Tier 1 supplier of Proprietary Automotive Solutions to Original Equipment Manufacturers (OEMs) and has 6 decades of deep experience in the Auto space. It has 71 manufacturing plants spread in India, Indonesia, Vietnam, Spain, Morocco, Mexico Colombia, and Germany; design centers in Taiwan, Japan and Spain; and sales offices in North America, Europe, and ASEAN Countries. With over 20 Product Lines, 1000 Business Partners, and over 23,000 employees cover more than 50,000 touch points. Over the years, the company has diversified across product divisions (Acoustics, Switches, Castings, Lighting, Seating, and others), segments (4Ws & 2Ws), geographies (International & Domestic), and channels (replacement & OEM).

Disclaimer

The stock has been picked from the brokerage report of Axis Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.