Uno Minda Ltd. has signed a technical licence agreement with Suzhou lnovance Automotive Co. for manufacture and sale of select high voltage category electric vehicle products for passenger and commercial vehicles in India.
E-charging control units, EV inverter, EV motors and next generation three-in-one electric drive systems are some of the products that will be produced and sold as part of the agreement.
Shares of the company rose 18% intraday, before paring gains to trade 16.05% higher at Rs 999.25 as of 11:05 a.m. The stock has risen 46.74% so far this year.
Key Levels
Resistance level: Rs 1,016 per share (Thursday's high).
Support level: Rs 807 apiece (three-day low).
Business
This partnership will significantly expand Uno Minda's electric vehicle four-wheeler product portfolio, enabling it to effectively cater to the growing Indian EV market. The company aims to further strengthen partnership by transitioning it into a joint venture, subject to necessary approvals, an exchange filing stated.
Inovance products include intelligent elevators, rail transit and new-energy vehicles. The company's revenue stood at over $4.2 billion in FY23.
Uno Minda had also entered into a technical licence agreement with Starcharge Energy in the fourth quarter, to manufacture and sell EV-Supply equipment in India. EVSE comprises wall-mounted AC chargers for home charging, which are sold along with EVs to customers by original equipment manufacturers. This partnership extends the EV-specific portfolio of Uno Minda to the passenger cars market.
Analyst Views
Kotak Institutional retained its ‘add’ rating on Uno Minda post the announcement of the partnership. Suzhou Inovance is one of the largest e-powertrain suppliers in China and uptick in EV adoption may lead to higher content share for the company, it said.
The brokerage estimates potential kit value of these e-axles along with AC chargers to range from Rs 1,50,000 to Rs 2,50,000.
Revenue potential from supply of e-axles and chargers is expected to be around Rs 2,600 crore by 2030, assuming 20% electrification of passenger vehicles and 10% market share for Uno Minda, Kotak said. This partnership will be subjected to Uno Minda paying royalty on sales in return for the technology exchange, it noted.
According to the brokerage, the company is also well-positioned to outperform industry growth due to:
Increase in premiumisation trend across two-wheeler and four-wheeler segments resulting in higher content.
Market share gains in select segments.
Addition of newer products in the EV segment.
Nomura had maintained a 'buy' on the company, following the announcement of its fourth quarter results. The brokerage has a target price of Rs 945 per share, implying a potential upside of 8%.
Premiumisation is a key driver for strong growth, as Q4 results beat Nomura's and Bloomberg's consensus estimates. The company will be a key beneficiary of strong demand for feature-rich new model launches by OEMs, Nomura said.
Of the 17 analysts tracking the company, 12 maintain a 'buy' rating, three recommend a 'hold' and two suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies a downside of 11.4%.
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