Bharat Seats

Bharat Seats is a JV between India’s Relan group, Maruti Suzuki and Suzuki 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 74.34% of which MSIL and SMC hold 14.81% each. Another group company of Bharat Seats, Sharda Motors holds 28.66%.

For Q2FY15, the company posted a very good set of numbers but in Q3, it has been largely flat. The company posted a 25% (YoY) rise in net sales at Rs.177 crore. Operating costs rose 26%. EBITDA for the quarter was at Rs.8.56 crore, exactly the same as in Q3FY14 but margins dropped from 6.07% to 4.84%. Tax outgo was down 27%. Net profit for the quarter came in flat at Rs.2 crore.

This 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.120 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 of the company is always just marginally above 1% but less than 1.5%. NPM for current Q3 was also thin at 1.13%.