Bharat Seats

Bharat Seats is a JV between India’s Relan group, Maruti Suzuki and Sukuki Motors for manufacturing of car seats for Maruti Suzuki. It also makes moulded floor carpets and Two Wheeler Seats for Maruti and Suzuki. The total promoter stake is at 74.21% of which MSIL and SMC hold 14.81% each.

For Q4FY14, the company did not have a very good quarter as despite a 10% (QoQ) rise in net revenue, it ended with a net profit of Rs.1.72 crore, a fall of 6%. The rise in operating costs, led by raw material costs led to the fall. And for FY14, it ended the year with a 40% rise in net profit at Rs.7 crore.

The company makes products mainly for Maruti and Suzuki thus its fortunes are tied deeply with them. It remains a small cap company with an equity of Rs.6.28 crore and market cap of just Rs.53 crore. It is sitting on a reserve of Rs.35 crore. Its margins are wafer thin and that is the biggest dissuading factor in this stock – NPM for almost all the four quarters of FY14 has been just over 1% but less than 1.5%.