Minda Industries Ltd – Surging Ahead in Auto-Ancillary!

Few of my takeaways from Q1 FY25 of Uno Minda

Uno Minda delivered robust performance in Q1 FY25, with 23% year-on-year revenue growth to INR 3,818 crores. The company saw broad-based growth across key product lines, particularly in lighting, alloy wheels, switches, sensors and controllers. EBITDA grew 24% YoY to INR 408 crores, maintaining margins despite higher costs. This indicates healthy underlying demand and the company’s ability to pass on cost increases.

𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐁𝐥𝐮𝐞𝐩𝐫𝐢𝐧𝐭:

The company has been quite active on the partnership front recently. Key initiatives include:

1. Technology licensing agreement (TLA) with StarCharge for EV chargers
2. TLA with Suzhou Inovance for high-voltage EV components
3. TLA with Aisin Corporation for sunroofs
4. Acquisition of ONKYO’s stake in JV to make it a subsidiary

These partnerships significantly expand Uno Minda’s EV capabilities and product portfolio, positioning it well for future growth areas.

𝐌𝐚𝐫𝐤𝐞𝐭 𝐃𝐲𝐧𝐚𝐦𝐢𝐜𝐬:

1. Increasing EV adoption: Uno Minda is rapidly building its EV component portfolio across 2W, 3W and 4W segments.
2. Premiumization: Focus on products like sunroofs caters to growing demand for premium features.
3. Localization: Partnerships aim to localize production of currently imported components.
4. Personalization: Products like innovative lighting solutions tap into this trend.

𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐲 𝐓𝐚𝐢𝐥𝐰𝐢𝐧𝐝𝐬:

1. Recovery in rural demand boosting 2W sales
2. Strong growth in utility vehicle segment
3. Government focus on promoting EVs
4. Increasing electronics content per vehicle

𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐲 𝐇𝐞𝐚𝐝𝐰𝐢𝐧𝐝𝐬:

1. Reduction in FAME II subsidies impacting E-2W sales
2. Slowdown in CV segment due to election-related spending pullback
3. Challenges in European operations due to macro headwinds

𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫/𝐀𝐧𝐚𝐥𝐲𝐬𝐭 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧𝐬:

1. Margin pressure: Management maintained FY25 margin guidance of 11% +/- 50 bps, with expectations towards the upper end.
2. Seating business growth: While near-term challenged, management reiterated INR 1,500 crore revenue target for FY26.
3. EV order book disclosure: Management stated they’ve established a track record now and prefer not disclosing given uncertainties.

𝐂𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐢𝐯𝐞 𝐋𝐚𝐧𝐝𝐬𝐜𝐚𝐩𝐞:

The entry into sunroofs pit Uno Minda against established players like Webasto. Management acknowledged tough competition but highlighted localization and cost competitiveness as key advantages. In EV components, the company seems well-positioned given its partnerships and existing relationships with OEMs.

𝐅𝐮𝐭𝐮𝐫𝐞 𝐏𝐫𝐨𝐣𝐞𝐜𝐭𝐢𝐨𝐧𝐬:

The company maintained its margin guidance and reiterated its target of 1.5x industry growth over the medium-long term. Near-term, it expects to cross INR 1,000 crore revenue from EVs in FY25.

𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐃𝐞𝐩𝐥𝐨𝐲𝐦𝐞𝐧𝐭:

Uno Minda plans capex of INR 1,300-1,400 crores in FY25 (excluding potential Inovance JV). The company has been judicious, committing capex mainly after securing business visibility. Net debt stands at INR 1,800 crores with net debt-to-equity at 0.23x, indicating a healthy balance sheet.

𝐎𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐢𝐞𝐬 & 𝐑𝐢𝐬𝐤𝐬:

Opportunities:

1. Rapid EV adoption across segments
2. Increasing content per vehicle
3. Export potential, especially in lighting

Risks:

1. Execution challenges in new product areas
2. Heightened competition in attractive segments like sunroofs
3. Potential slowdown in PV segment after strong growth

𝐑𝐞𝐠𝐮𝐥𝐚𝐭𝐨𝐫𝐲 𝐂𝐥𝐢𝐦𝐚𝐭𝐞:

Reduction in EV subsidies poses near-term headwinds, but the government remains committed to EV adoption. Safety and emission norms continue to drive higher component content.

𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫 𝐏𝐮𝐥𝐬𝐞:

There is a strong demand across segments, particularly in 2W and SUVs. OEMs seem receptive to Uno Minda’s new offerings in areas like EV components and sunroofs, signaling positive sentiment.

Disclaimer: This is a general analysis and does not constitute financial advice.