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11 hours ago
Why Uno Minda stock valuation is getting reset
Summary
Uno Minda Ltd shares are down 22% so far in 2026. After the slide, the stock trades at a price-to-earnings multiple of 30x, based on Nomura’s FY28 estimates, and on par with the broking firm’s estimates for other auto ancillaries such as Sona BLW Precision Forgings and Bharat Forge.
Why has Uno Minda stock fallen?
While the US-Israel-Iran war affects exports from India, Uno derives a relatively small share from exports at 10% of revenues. But it also has an indirect exposure to exports through supplies to its customers or original equipment manufacturers (OEMs)—contributing more than 90% of revenue—that are sending vehicles overseas. Thus, Uno is heavily dependent on OEMs versus other auto ancillaries, such as tyre companies that normally sell more than half of their volumes in the replacement market.
Within OEMs, Uno derived about 48% of its revenue from the passenger car segment in the first three quarters of FY26 (9MFY26), with Maruti Suzuki India being a prominent customer besides Hyundai Motor India.
An The Economic Times report suggested Indian automakers are delaying shipments to West Asia and North Africa as escalating regional tensions have made sea routes through the Strait of Hormuz risky. Moreover, freight and insurance costs have soared. As export volumes of Maruti and other OEMs likely to suffer, it could lead to lower business for Uno.
But, if Maruti’s export offtake—18% of total 9MFY26 sales volume—is taken as a proxy for the likely hit on Uno’s volumes, the latter’s investors seem unduly worried. Maruti has clarified that West Asia formed 12.5% of its exports. This is just 2% of total sales that could get hit. Maruti’s export to North Africa is unlikely to be significant because its customer base spans more than 100 countries.
Given this, Uno’s investors may do well to focus on its two key strengths that have helped the stock fetch premium valuations. One, its ability to grow faster than the auto industry. For instance, the passenger vehicle and two-wheeler industry is expected to grow by 8% and 7% in FY26, but Uno Minda’s revenue growth is likely to be 18% as per Nomura’s estimates. Second, it has a well-diversified product portfolio across switches, lighting, acoustics, castings and seatings with no product segment contributing over 25% of total revenue.
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Why has Uno Minda stock fallen?
While the US-Israel-Iran war affects exports from India, Uno derives a relatively small share from exports at 10% of revenues. But it also has an indirect exposure to exports through supplies to its customers or original equipment manufacturers (OEMs)—contributing more than 90% of revenue—that are sending vehicles overseas. Thus, Uno is heavily dependent on OEMs versus other auto ancillaries, such as tyre companies that normally sell more than half of their volumes in the replacement market.
Within OEMs, Uno derived about 48% of its revenue from the passenger car segment in the first three quarters of FY26 (9MFY26), with Maruti Suzuki India being a prominent customer besides Hyundai Motor India.
An The Economic Times report suggested Indian automakers are delaying shipments to West Asia and North Africa as escalating regional tensions have made sea routes through the Strait of Hormuz risky. Moreover, freight and insurance costs have soared. As export volumes of Maruti and other OEMs likely to suffer, it could lead to lower business for Uno.
But, if Maruti’s export offtake—18% of total 9MFY26 sales volume—is taken as a proxy for the likely hit on Uno’s volumes, the latter’s investors seem unduly worried. Maruti has clarified that West Asia formed 12.5% of its exports. This is just 2% of total sales that could get hit. Maruti’s export to North Africa is unlikely to be significant because its customer base spans more than 100 countries.
Given this, Uno’s investors may do well to focus on its two key strengths that have helped the stock fetch premium valuations. One, its ability to grow faster than the auto industry. For instance, the passenger vehicle and two-wheeler industry is expected to grow by 8% and 7% in FY26, but Uno Minda’s revenue growth is likely to be 18% as per Nomura’s estimates. Second, it has a well-diversified product portfolio across switches, lighting, acoustics, castings and seatings with no product segment contributing over 25% of total revenue.
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Download the Mint app and read premium stories
AI Description
The article discusses the reasons behind the reset in stock valuation for Uno Minda, focusing on its indirect exposure to exports and the impact of geopolitical tensions.