UNO Minda vs Sona BLW

Here’s by how much the Budget increased allocations for some prominent sectors on July 23rd?2024?

??PLI for Pharma: ?1,696?Cr?????2,143?Cr

??Electronics / IT Products:??4,650?Cr?????6,200?Cr

??Solar Power:??4,970?Cr?????10,000?Cr

??Nuclear Power:??442?Cr?????2,228?Cr

??PLI for Auto Components:??484?Cr?????3,500?Cr?

??The jump in allocation for Auto Components is the biggest, underscoring the Govt’s. push for this employment-generating sector?

??Further, the BJP’s Election Manifesto?emphasized?a focus on manufacturing Electric Vehicles, and?the growing need for localization in the EV segment

??These add up to massive tailwinds for two of India’s premier auto component makers?-?Uno?Minda?and Sona BLW Precision Forgings?

??Here's?a?head-to-head comparison

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??Here's a snapshot of?both companies

Uno?Minda

?Mkt Cap ~ ?57,810?Cr

?CMP ~ ?1007/-

?P/E ~ 65.1x

?1Y Return ~?80%

??Sona BLW Precision Forgings

?Mkt Cap ~ ?38,296?Cr

?CMP ~ ?653/-

?P/E ~?70.6?x

?1Y Return ~ 18%?

??Key Difference?

??While both companies are deeply involved in the automotive sector with a focus on innovation and expansion, Uno?Minda?has a broader product range and diversified client base

??Sona BLW on the other hand, is highly specialized in driveline parts and motor systems, with significant growth in the EV segment?(especially Battery Electric Vehicle segment)?and a global presence in manufacturing and R&D

??While Uno?Minda?is a heavily promoter driven company with them holding close to 70% shareholding, Sona BLW is a professionally managed company with Blackstone PE holding maximum stake. Promoter family holds approx. 35%

??Sona BLW focusses on manufacture of mechanical components for the auto industry, while Uno?Minda?focusses more on electrical components for the same?

??Sona BLW?has a far greater exposure towards EV products than Uno?Minda. However,?Minda?is quickly catching up??

??Business Overview

??Uno?Minda

??Uno?Minda?primarily manufactures and supplies automotive solutions including

??Switching systems

??Lighting

??Casting

??Acoustics

??Seating systems

??Alloy wheels, and EV-specific products

??The Co. is heavily focussing on manufacturing EV specific products such as?onboard chargers, DC-DC converters, battery management systems (BMS), motor controllers, traction motors, and telematics

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??Sona BLW

???Sona BLW specializes in designing and manufacturing engineered automotive systems and components such as

??Differential assemblies?(sector leader with more than 50% market share)

??Gears and various motor systems including conventional, micro-hybrid, and EV traction motors

??The company focuses on driveline parts and motors, with a significant emphasis on electric and hybrid vehicle components

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???Manufacturing & Capacity Expansion

??Uno?Minda?Ltd

??Significant capacity expansions in wheels, alloy wheels, and seating systems across various plants

??New Facilities and Expansions are being done for the following:

[1] 4W Alloy Wheels: ?542 crore at?Kharkhoda, 120k wheels per month by Q2 FY26

[2] 2W Alloy Wheels: ?190 crore at Pune, 2 million wheels per annum by Q3 FY24

[3] EV Specific Products: ?390 crore at Gurugram, new facility for EV products by Q2 FY24

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??Sona BLW

??Operates 9 manufacturing plants and 4 R&D?centers?across multiple countries

??Recent expansion plans include setting up captive solar power plants to support sustainable operations

??Capex:?Co. is planning ?1,000?-??1,200 crores over the next 2?-?3 years

??Order?Book and Special Points ?

??Uno?Minda?Ltd

??Co. has a total order value of ?3,755 crores

??According to the latest?concall?update, Uno?Minda?expects to cross ?1,000 Cr in revenue from EV products in next 12 months?

??Co.?is focussing big time on localisation (in tune with Make-in-India) and premiumisation trend. Emphasising on increasing content per vehicle?and kit value?

??Continuous expansion of existing?product portfolio?and?addition of new product lines?- Alloys,?Infotainment, Seating, Air Braking etc.

??Uno?Minda?has multiple ongoing capacity and product expansions?across various states. Expanding small, but many factories?

??Sona BLW?

??Sona BLW's net order book stands at ?23,300 crores, which is?8X its FY24 revenue.?EV segment contributes 79% of this order book and has much higher margins?

??Industry leading operating margins which have consistently been in higher 20’s. This shows operational efficiency

??Has a big exposure to international markets, especially European markets?(which are facing demand slowdown currently)

??Sona BLW was the first auto component maker to?receive certification products under PLI scheme?

??Shift from being an auto component maker to a?full fledged?Mobility company ?

??Note – both companies have a significant exposure towards the EV and BEV segments with multiple products?

???Recent?Contracts and?Tie Ups

??Uno?Minda?

??Entered into?agreement with Suzhou?Inovance, among top 3 largest electric powertrain suppliers in China. Uno?Minda?will get access to their technology (for a royalty payment) to develop, manufacture and sell chargers, e-axles, inverters, and motors

???Partnered with?Asin Corporation of Japan to manufacture and sell sunroofs in India.?AISIN?is?ranked top 10 global tier 1 automotive supplier and?holds largest market share in Sunroof in?Japan

??Sona BLW

??Won contract worth ?680 Cr from American OEM for supply of new age Differentials

??Won contract worth ?150 Cr from an Asian OEM for supply of in cabin sensors?

??Sona BLW tied up with a UK based Co. to make high performance Electric Powertrains in 2023. It also tied up with an Israeli firm for Smart Mobility solutions in 2022

??Results

??Uno?Minda?Ltd

?Q1?FY25?Results (YoY)

??Revenue: ?3,093?Cr?????3,818?Cr (Up?23%)

??Operating Margins: 11%????11%

??Profit: ?180?Cr?????211?Cr (Up?17.22%)

?FY24 Full Year Results

??Revenue: ?11,236 Cr?????14,031 Cr (Up 24.87%)

??Operating Margins: 11%????11%

??Profit: ?700 Cr?????925 Cr (Up 32.14%)

???Sona BLW Precision Forgings Ltd

?Q1 FY25 Results (YoY)

??Revenue: ?674 Cr?????830 Cr (Up 23.14%)

??Operating Margins: 28%????29%

??Profit: ?102 Cr?????155 Cr (Up 51.96%?

?FY24 Full Year Results

??Revenue: ?2,469 Cr?????2,893 Cr (Up 17.17%)

??Operating Margins: 26%????29%

??Profit: ?388 Cr????484 Cr (Up 24.74%)

??Verdict

??The new age auto component manufacturing sector is a game of technology tie ups. Whichever firm can leverage better tech through tie ups with foreign firms has an advantage

??With the backing of Blackstone PE, and being a professionally managed company, Sona BLW has an edge in this department

??Sona BLW also has industry leading operating margins, and a huge order book equal to 8X its revenue. Besides, it has better financials and fundamentals too