Bharat Seats posted a very good set of numbers for Q1FY17, with net profit coming in at Rs.2 crore, up by a smart 70% (YoY) and this was on a modest 7.5% rise in total income at Rs.204 crore. It kept a tight leash on its costs and this helped improve the EBITDA which was up 9% at Rs.7 crore and margins improved marginally from 3.5% to 3.6% (YoY).

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%.

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.150 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 1.5% but less than 2%.