The brokerage has initiated coverage on Uno Minda with a “buy” recommendation, and a price target of ₹1,406 per share, which indicates an upside of 25%, and in a bull-case scenario it has set a price target of ₹1,694 apiece, indicating a 50% upside. It has positioned the stock as its top pick in the auto ancillary sector.
The brokerage said Uno Minda has a well-diversified and largely fuel-agnostic product mix with an ability to enter new high potential segments through partnerships or its own research and development (R&D) centres globally.
Uno Minda is also 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 over the years.
Uno Minda’s management’s long-term aspiration to deliver 1.4 times to 1.5 times higher growth than the underlying industry appears highly credible given its past track record of outperformance above this threshold, Motilal Oswal said. The management expects FY27 to be a defining growth year for the firm, as seven of its 11 new projects will be operational or in a ramp-up phase.
The brokerage believes Uno Minda can be viewed as a long-term structural growth story given its consistence outperformance to core industry growth with healthy return ratios and its ability to foray into new emerging businesses with high-growth potential.
Motilal Oswal said that considering these factors, along with solid financial strength and robust growth expectation, that of 19% revenue CAGR and 23% PAT CAGR over FY26-28, Uno Minda’s premium valuations appear justified.
The brokerage values the firm at 45 times its earnings per share (EPS) estimates for FY28.
Bull case
In a bull case scenario, Motilal Oswal sees a 50% upside for the stock.
Motilal Oswal projects Uno Minda’s revenue to record a 22% CAGR over FY26-28, driven by premiumization and rising content supplied to original equipment manufacturers (OEMs).
It said adjusted margins are expected to expand by around 100 basis points to 12% by FY28, driven by normalization of cost pressure and improved mix.
The brokerage added that the company’s EPS is expected to see a 31% compound annual growth rate (CAGR) over FY26-28, aided by robust revenue growth and margin improvement.
Stock reaction
Of the 23 analysts who have coverage on the Uno Minda stock, 17 have a “buy” rating and three each have “hold” and “sell” ratings.
Uno Minda shares gained 2.1% to hit an intraday high of ₹1,152.8 apiece on Wednesday. The stock is trading 1% higher currently, at ₹1,140.5. The stock is up 8% over the last one month and is down 11% so far this year.
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