SPA Research is bullish on Setco Automotive
and has recommended buy rating on the stock with a target of Rs 164 in its November 29 2012 research report.
“Setco's net sales stood at INR 753 mn, down by 4.3% YoY & up by 1.3% QoQ. Net sales took a hit on account of lower offtake from the M&HCV segment. EBITDA Margin stood at 14.6%, contracted by 438 bps YoY & 42 bps QoQ led by higher employee cost and operating expenses. With expectation of revival in M&HCV demand from 2HFY13, improved replacement demand & increased focus on exports, we change our recommendation from "HOLD" to "BUY" on the stock.”
“Setco reported net sales of INR 753 mn, down by 4.3% YoY & up by 1.3% QoQ, mainly on account of lower offtake from the M&HCV OEM segment. PAT at INR 63 mn was down by 52.5% YoY (company received favorable tax incidence in the same period last year) & up by 1.5% QoQ. Other Income component has increased sharply from INR 0.7 mn in Q2FY12 to INR 34.5 mn on account of healthy dividend
income from its subsidiary and associate companies. In Q2FY13, OE sales at INR 324 mn, contributed 43% to revenues and were down by 29.4% YoY. Replacement sales contributed 49% in Q2FY13 (36.1% in Q2FY12) and stood at INR 369 mn, up by 29.8% YoY. Exports at INR 60 mn, contributed 8.0% to sales and were up by 99.3% YoY. In Q2FY13, EBITDA Margin at 14.61%, contracted by 438 bps YoY & 42 bps QoQ led by higher employee cost and operating expenses. PAT margin remained flat sequentially at 8.38%. Q2FY12 results are not comparable as the company had received favorable tax treatment in the same period last year.”
“We expect Setco to gain from the improved replacement demand from H2FY13 as the replacement cycle started from Oct'12 (completion of 2 years in changes to BS-III norms). Setco is also likely to gain with increased operations of Daimler in India from FY14. We expect Setco's revenue & profit to register a CAGR of 21% & 14% respectively over the next two years. We change our recommendation from "HOLD" to "BUY" on the stock with a target of INR 164 in 12 months at 5.5xFY14E EV/EBITDA,” says SPA Research report.
Public holding more than 90% in Indian cos
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