UNO Minda shares climbed over 3% to hit ₹1,125.70 on the BSE on Tuesday after Jefferies initiated coverage on the auto component maker with a 'Buy' rating and a target price of ₹1,350, implying about 25% upside from the previous close. As per The Economic Times, the brokerage expects strong earnings growth driven by rising content per vehicle, premiumisation trends and expanding presence in EV components and advanced automotive systems.
In its initiation note, Jefferies highlighted UNO Minda's growth track record and strong earnings outlook, projecting a 17% revenue CAGR, 20% EBITDA CAGR and 25% EPS CAGR over FY26-28, along with an average return on equity of around 20%. The report positions UNO Minda as a growth amplifier in the Indian auto component space, noting that the company has delivered 23-25% CAGR in revenue and EPS over FY16-26E, significantly outpacing India's passenger vehicle and two-wheeler production CAGR of 4-5%. Jefferies expects this outperformance to continue, driven by rising content per vehicle across segments and capacity expansions in lighting, alloy wheels and airbags.
UNO Minda offers excellent exposure to Indian autos backed by a fast-growing, well-diversified and largely powertrain-agnostic portfolio, with nearly 90% of its sales coming from the domestic market. According to Jefferies, the company is among the top three players in India in most of its component categories, citing a dominant 55% market share in both four-wheeler and two-wheeler switches, leadership in passenger vehicle alloy wheels with 45% share, and top-two positions in lighting and acoustics. The brokerage noted that the company's portfolio is well placed to benefit from structural trends such as premiumisation, rising SUV penetration and higher adoption of safety and comfort features.
On valuations, Jefferies acknowledged that UNO Minda's current 42x FY27 estimated price-to-earnings multiple looks rich in absolute terms but argued that it is in line with the stock's five-year average of about 43x and supported by the company's fundamentals. The analysts initiated at Buy with ₹1,350 PT at 42x FY28E PE, flagging slower industry growth and any delay in ramp-up of new capacities as key risks to their positive view. Jefferies believes premium valuations are justified for the strong growth, low margin volatility and high ROE profile of the company.
