Harita Seating

Harita Seating Systems is a part of the TVS group. It is a leading manufacturer of seating systems in India, with six plants across India. Its customer list includes the who’s who of the auto sector – right from Tata Motors, Nissan, Ashok Leyland, Mahindra, Eicher, Escorts, TAFE, BEML, Hyundai, Volvo, L&T Construction and many more. Promoter stake is 66.35% of which 14% is held by foreign promoter, Mr.Martin Grammar.

For Q2FY15, the company posted a ‘turnaround’ set of numbers on YoY but flat when one looks at its sequentially. Its net profit for the quarter was at Rs.1.5 crore v/s net loss of Rs.16 lakh in previous Q2 and net profit of Rs.1.6 crore in Q1. Net revenue rose 14% (YoY) at Rs.66 crore, giving a NPM of 2.27%.  For such auto ancillary companies, wafer thin margins are typical. This company is comparable with Bharat Seats, which is basically a Maruti company and its NPM for most quarters has been just over 1% but less than 1.5%. Compared to that Harita’s margins are better. Annualised EPS for FY15 on an equity of Rs.7.8 crore is Rs.8 and this discounts the current price by 18 times.