GST cut will be passed through; aftermarket to benefit, OEM business unchanged: Uno Minda

Sunil Bohra, CFO of Uno Minda, a Gurugram-based auto components manufacturer, said the recent goods and services tax (GST) rate cut from 28% to 18% will be passed through, with benefits expected in the aftermarket segment, while the company’s original equipment manufacturers (OEM) business, which accounts for about 90% of revenues, will remain unchanged.“Because we are primarily into a B2B business, which is almost 90% of revenues, there you won’t see any impact, because GST we always pass through,” Bohra explained. “From a B2C perspective, which is the aftermarket segment, about 9-10% of our revenues, their prices will come down in line with the tax cuts.”

He noted that aftermarket demand is usually need-based, so volumes may not rise immediately. Inventory carried by the company will not be affected as GST input credits are adjusted. Imports, too, will not see much change since taxes are passed through.On the broader outlook, Bohra said some vehicle purchases may have been deferred ahead of the rate cuts, but production has continued. “Despite that, our customers have been continuing the production… we do expect that the demand should go up,” he said. He added that affordability has improved with a mix of income tax cuts, the Reserve Bank of India (RBI) rate reductions, and now GST cuts.

Also Read | Edelweiss AMC adds four-wheelers, mass consumption to portfolio post GST cutThe company expects growth momentum to continue, supported by new plants under construction. In the first quarter, Uno Minda reported 16% growth, compared to a few percentage points for the industry.

On electric vehicles (EVs), Bohra said penetration is still small, with two-wheelers around 7–8% and four-wheelers 3-4%. “This price reduction might impact a little bit, but we are in a very nascent stage of the EV volumes,” he said, noting that adoption will continue over the long term.

Uno Minda has a market capitalisation of ₹76,532.03 crore, and its shares have gained more than 24% over the past year.

For the full interview, watch the accompanying video

Catch all the latest updates from the stock market here