UNOMINDA - UNO Minda Limited Share Price

Management provided a positive outlook for Uno Minda Limited in their Q1 FY'26 earnings call, reflecting confidence amid the general economic landscape. The company anticipates continued growth driven by robust domestic demand, supported by India's projected GDP growth of 6.4% for 2025, according to the IMF. Factors contributing to this growth include the demographic dividend, urbanization, and government initiatives like Make in India.

In Q1 FY'26, the consolidated revenue from operations reached Rs.4,489 crores, with normalized revenue at Rs.4,420 crores, marking a 16% year-on-year growth from Rs.3,818 crores. Adjusted EBITDA stood at Rs.474 crores with stable margins of approximately 10.7%. Profit after tax (PAT) was Rs.291 crores, or Rs.239 crores on a normalized basis, reflecting a 21% growth year-on-year.

Key forward-looking points include:

• The automotive industry is cautiously optimistic about recovery, particularly with the upcoming festive season and improvement in rural incomes due to favorable monsoons.
• There is an anticipated ramp-up in production capacities across various segments, including lighting and alloy wheels, with expectations of new orders particularly in electric mobility products.
• Planned capital expenditure for FY'26 is approximately Rs.1,600-Rs.1,700 crores, with investments focusing on growth technology, including EV components.
• Management noted ongoing expansion projects, including a significant investment in a new plant for high-voltage EV powertrain components, expected to be operational by Q2 FY'27.

Overall, Uno Minda Limited is positioning itself strongly for sustained growth, aiming to outpace sector averages with a focus on innovation and expanding its technological capabilities.

Question 1: "So, after a very strong run of consistent SUV growth, June 2025 seems to be the first month where SUV growth sort of became flat. I just wanted to understand, near term, over the next 2-3 quarters, how are you thinking about castings growth?"

Answer: We remain optimistic about the casting business. We are making significant investments in both two-wheeler and four-wheeler alloy wheel businesses, tied to confirmed purchase orders. While the flat growth in SUVs this June is noted, we believe it to be temporary. Our focus is on the application ratio, which is stabilizing, and as customer demand shifts back towards alloy wheels, we expect positive results in the upcoming quarters.

Question 2: "Could you give some more sense on the new plant that you are looking to set up for EV castings with a Rs. 210 crores investment?"

Answer: This new plant is specifically for EV four-wheeler components and focuses on complex aluminum castings. While this investment is significant and will have lower asset turnover, it is essential for our backward integration into EV production. We aim to maximize efficiency once operational, and though initially focused on EV, we may explore additional components in the future.

Question 3: "Now that we have acquired FRIWO, is there a change in approach from the management side based on what your OEM customers are doing?"

Answer: Our acquisition of FRIWO strengthens our technology base without reliance on third-party partners, transitioning from a joint venture to full ownership. This move is based on FRIWO's operational challenges and aligns with our focus on in-house capabilities for EV components. Our approach remains consistent, dedicated to our existing partnerships and strategic expansions in EV technologies.

Question 4: "With the growth expected to come from new ventures, how should we think about margin trajectory?"

Answer: The ongoing projects are initially a drag on margins, as we invest and ramp up production. We aim for profitability within three years post-launch. Operating costs remain steady, but as projects mature and revenue becomes stable, we anticipate a positive margin trajectory over the medium term, benefiting from both operating leverage and a more favorable product mix.

Question 5: "Can you provide an update on the aftermarket revenue and its strong growth this quarter?"

Answer: We've aggressively enhanced our aftermarket strategy, improving brand visibility and strengthening product offerings. This has led to robust growth in sales, which positions the aftermarket segment as a significant contributor to our revenue. We've seen a marked increase in both direct aftermarket sales and OEM-linked sales, indicating a holistic growth approach.

Question 6: "Could you elaborate on the incentives income of Rs. 69 crores that were recognized?"

Answer: This amount pertains to state incentives recognized in this quarter, due to approval finally being granted for a prior period. It's a non-recurring income meant for previously established projects, enhancing our competitiveness. Future expansions will also benefit from incentives as we continue to align on new projects, albeit with potential lumpiness in recognition.

Question 7: "What are the CAPEX plans for the next year?"

Answer: Our guidance includes approximately Rs. 350-400 crores in maintenance CAPEX and about Rs. 1,300 crores towards growth initiatives for FY'26, totaling around Rs. 1,600-1,700 crores. This substantial investment underscores our commitment to expanding capacity and capabilities across multiple product lines and geographic areas.

Question 8: "How do you see the growth in airbag business given recent OEM launches?"

Answer: The airbag segment has experienced significant growth due to new regulatory changes and increasing demand for safety features. As many OEMs adopt four-airbag systems, we expect further growth driven by expanding our manufacturing capacities, particularly with our new plant in Neemrana, which is designed to meet increasing market demands effectively.

Question 9: "Could you comment on the impact of rare earth materials on your sensor business?"

Answer: While our reliance is minimal, we do use some rare earth magnets in our sensors. However, we've effectively managed to mitigate potential impacts through diverse sourcing strategies, ensuring that our production lines remain unaffected. Our strong relationships with suppliers allow us to maintain continuity in our operations, thereby minimizing disruption.

This format captures the key exchanges while adhering to the character limits and providing detailed information.