Motilal Oswal has initiated coverage on Uno Minda Ltd. with a 'buy' rating and has ranked the stock as its top pick in the auto ancillary sector. The brokerage values Uno Minda at 45 times FY28E earnings per share to arrive at a target price of ₹1,406 per share, implying a potential upside of 25% from current levels. Considering multiple growth triggers, along with solid financial strength and robust growth expectations, Uno Minda's premium valuations appear justified, according to Motilal Oswal's analysis. The brokerage believes Uno Minda will fit in as a long-term structural growth story given its well-diversified mix that shields it from cyclicality of any particular sector, strong presence in different segments with high-growth potential, and ability to foray into new emerging businesses either on its own or through partnerships.
Uno Minda shares gained 2% to ₹1,154.20 following Motilal Oswal's positive coverage initiation, with the target price implying an upside of 24.25% from the previous closing price of ₹1,131.60 recorded on the BSE. The stock was trading nearly 2% higher at ₹1,150 levels in intraday deals on the BSE, as reported by Business Standard. Shares of Uno Minda gained over 3% to ₹1,169 on the BSE on Thursday after Motilal Oswal initiated coverage, demonstrating strong market response to the positive analyst coverage. The domestic brokerage highlighted that the company is emerging as one of the key beneficiaries of structural growth trends in the industry, such as premiumization and EV transition, which are driving a steady rise in content per vehicle (CPV) for Uno Minda over the years.
Uno Minda has a well-diversified and fuel-agnostic product portfolio with exposure across all major automobile segments. In FY26, switches contributed 25% of revenue, followed by lighting at 22%, castings at 19%, seating at 7%, green mobility at 7% and other products at 19%. The company's revenue mix shows passenger vehicles accounted for 48% while two-wheelers contributed 42%, with the remaining from three-wheelers (3%), commercial vehicles (4%) and off-the-road (OTR) vehicles (3%). The brokerage highlighted that the Indian automobile industry has witnessed a clear premiumisation trend, with utility vehicles' share in passenger vehicles increasing to 67% in FY26 from 21% in FY16, and motorcycles with engine capacity of 125cc and above rising to 55% in FY26 from around 36% in FY16. This premiumisation trend is driving higher content per vehicle (CPV) for Uno Minda, supported by stricter safety and emission regulations.
Uno Minda announced on Tuesday that it is expanding into the 4-wheeler passenger vehicle seating systems segment through its joint venture with Tachi-S Seating Private Limited. The company had been manufacturing seat recliners since 2022, but is now expanding to manufacture complete seating systems. According to Nomura's report, passenger 4-wheeler vehicle seating systems are one of the highest-value products in the automotive supply chain. The joint venture has already secured an order from a leading OEM, which reduces initial risk associated with the expansion. The company's board has approved a greenfield manufacturing facility in Chhatrapati Sambhajinagar, Maharashtra with a proposed capex of ₹3.2 billion to scale up production, expected to start production in the last quarter of FY 2028 with an annual capacity of around 240,000 units per year.
FY27 is expected to be a defining year for growth, with seven of its 11 new projects either becoming operational or entering the ramp-up phase during the year. The brokerage expects the company to deliver a compound annual growth rate (CAGR) of 19% in revenue, 20% in EBITDA and 23% in profit after tax (PAT) over FY26-28. Motilal Oswal also expects Uno Minda to remain free cash flow (FCF) positive over FY26-28 despite higher capital expenditure, with net debt declining to ₹1,780 crore by FY28 from ₹2,150 crore in FY26. The company's seven of 11 new projects will be operational or in a ramp-up phase in FY27, positioning it as a defining growth year for the company. The brokerage notes that returns are likely to improve in FY28 as the newly created capacities are fully ramped up.
