Uno Minda all lit up with more content per car and focus on electric vehicles

Uno Minda, a large-cap supplier of lighting, switching, acoustics and seating solutions to global automobile companies, has outpaced the industry growth aided by improving content per vehicle through premium offerings, introducing new products and expanding the electric vehicles (EVs) segment.

The 18% annual growth in its revenue over the past five years was nearly two-and-a-half times better than the industry average. The company reported a strong business traction in FY24 with 25.2% growth in revenue at ₹14,064.7 crore while expanding its operating margin (Ebitda margin) by 20 basis points to 11.3%. The stock has gained 37% over the past three months, which includes a 16% gain in the past eight trading sessions after its March quarter result declaration.

The company's lighting and light metal technology (LMT) divisions, which together contribute nearly 50% to the revenue, were major growth drivers. Lighting revenue rose by 44% year-on-year in the March quarter helped by increasing adoption of app-controlled connected tail lamps by car makers and capacity expansion. The LMT segment recorded 43% growth during the quarter, supported by robust demand in two-wheeler and four-wheeler alloy wheels.


The impact of premiumisation across vehicle segments is evident from the significant increase in the company's kit value, which reflects the value of parts supplied for a vehicle. In the premium bike segment, the kit value rose to ₹15,798 in FY24 compared with ₹9,231 in FY20. Similarly, in the sports utility vehicle segment (SUV), one of the fastest-growing passenger vehicles (PV) segments, the kit value nearly doubled to ₹2,06,466.

The company's kit value has grown at an annual rate of 14% over the past four years. Higher kit value bodes well for revenue growth.

The company is keenly focused on encashing the EV opportunity. Recently, it secured orders to supply on-board chargers, battery management systems, motor controllers, and DC-DC converters. It bagged ₹3,755 crore worth of orders from EV makers in FY24, which includes ₹2,510 crore from two-wheelers and the remaining from passenger cars.

Given the spate of new orders, the kit value in the electric two-wheeler segment is projected to increase to ₹35,000 in FY25 from ₹28,000 in the previous year. Revenue growth will be sustained amid rising content per vehicle and capacity expansion. It plans to invest ₹1,300 crore-₹1,400 crore in the current fiscal and approximately ₹2,500 crore over the next few years.

At Monday's closing of ₹877.5, the stock was traded at 45.2 times one-year forward earnings against the long-term average of 27 times. It is likely to sustain the rich valuation given the growth prospects.