Multibagger Uno Minda stock gains 12.5% to hit record high after Goldman Sachs initiates coverage with a ’buy’ tag

Goldman Sachs has initiated coverage on the stock with a 'buy' rating and set a target price of 1,350 apiece. It highlighted Uno Minda's strong position in the Indian auto components industry as a key factor in their optimistic outlook.

A Ksheerasagar
First Published20 Jun 2024, 10:32 AM IST
Multibagger Stock: Since March 2023, the company's shares have risen from lows of  <span class='webrupee'>₹</span>481 apiece to the current trading price of  <span class='webrupee'>₹</span>1,110, resulting in a significant gain of 130%. Over the past three years, the shares have surged by 236 %, and over the last five years, they have increased by 606%.
Multibagger Stock: Since March 2023, the company’s shares have risen from lows of ₹481 apiece to the current trading price of ₹1,110, resulting in a significant gain of 130%. Over the past three years, the shares have surged by 236 %, and over the last five years, they have increased by 606%.(Pixabay)

The rally in Uno Minda shares appears set to continue, even after 15 consecutive months of upward momentum without significant pullbacks. In today's trade, the shares extended their bull run, reaching a new all-time high of 1,188 apiece with a 12.60% intraday gain.

This latest spike in share prices followed a report from global brokerage firm Goldman Sachs, which initiated coverage on the stock with a 'buy' rating and set a target price of 1,350 apiece. It highlighted Uno Minda's strong position in the Indian auto components industry as a key factor in their optimistic outlook.

Also Read: Mahindra & Mahindra cranks into top gear as demand tailwinds accelerate growth

The brokerage firm predicts that localization in high-margin areas will support profit growth visibility. It further added that the early product portfolio on E2Ws represents kit value optionally.

“More room to run in 4W lighting and 2W alloy wheels. The high multiplier on industry volume growth + stable margin profile,” the brokerage firm added.

Earlier, domestic brokerage firm Kotak Institutional Equities noted that Uno Minda is well-positioned to benefit from the growing EV penetration, thereby increasing its overall content per share.

This positive outlook followed the company's announcement of a Technical License Agreement (TLA) with Suzhou Inovance Automotive Co., Ltd., China (Inovance Automotive), to manufacture and sell select high-voltage electric vehicle products for passenger and commercial vehicles in India.

Also Read: Tata Motors puts pedal to the metal but margin, market share concerns remain

Under this agreement, Uno Minda will be able to produce combined charging units (CCU), e-axles, inverters, and motors. In exchange for the technology, the company will pay a royalty on sales. This partnership is expected to significantly expand Uno Minda's e-4W product portfolio, enabling it to effectively serve the growing Indian EV market.

According to Kotak estimates, the potential kit value of these e-axles, along with AC chargers, can range from 150,000 to 250,000. The brokerage projects the company's revenue potential from supplying e-axles and chargers to be around 26 billion by 2030, assuming a 20% electrification of passenger vehicles and a 10% market share for the company, which could represent 6–7% of consolidated revenues.

Also Read: Auto stocks in top gear: What's driving the rally? Experts recommend 10 stocks to buy from the sector

Kotak maintained its FY2025-27 consolidated EPS estimates and believes Uno Minda is well-positioned to outperform industry growth. This is due to the increasing trend of premiumisation across 2W and 4W segments (resulting in higher content), market share gains in select segments, and the addition of newer products in the EV segment.

Since March 2023, the company's shares have risen from lows of 481 apiece to the current trading price of 1,110, resulting in a significant gain of 130%. Over the past three years, the shares have surged by 236 %, and over the last five years, they have increased by 606%.

Also Read: Exicom Tele-Systems: How this smallcap stock is charging up India’s EV ecosystem

Uno Minda is one of the leading manufacturers of automotive switching systems, automotive lighting systems, automotive acoustics systems, automotive seating systems, and alloy wheels in India. It manufactures and supplies over 20 categories of automotive components and systems to leading Indian and international OEMs based in India, Asia, South and North America, and Europe.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

 

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First Published:20 Jun 2024, 10:32 AM IST
HomeMarketsStock MarketsMultibagger Uno Minda stock gains 12.5% to hit record high after Goldman Sachs initiates coverage with a ’buy’ tag

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