Domestic component maker Setco Automotive, one of the largest manufacturers of clutches for commercial vehicles, has reported revenue of Rs 306 crore, up 50.4 percent in H1 FY2019.
The company reported EBITDA of Rs 44 crore (+189% YoY), EBITDA margin at 14.5 percent, while PAT was Rs 16.98 crore. For Q2 FY2019, the company reported revenue of Rs 168 crore (+25.1%), EBITDA at Rs 23.77 crore (+26.6%), EBITDA margin at 14.1 percent, while PAT was Rs 8.80 crore (+ 7.57%) compared to Rs 8.18 crore for the same period last year.
The company’s management maintains its sales growth guidance at around 35 percent for the year. Commenting on the result, Harish Sheth, chairman and MD, Setco Automotive, said: “Strong economic fundamentals continue to drive the growth of the M&HCV segment. This growth trend is seen for the last five quarters in a row and the growth cycle is expected to continue for the next 3-4 years, driven by the government’s thrust in the rural sector and investment in infrastructure. All planned initiatives are on target to build on this strong start and deliver a superior top line and bottom-line performance by strong cost management and better efficiencies.”
Setco states the strong results have come on the back of growth in its OEM business by around 65 percent compared to M&HCV industry production growth of 57 percent. After the introduction of the new tax regime of GST, there has been a significant shift to the organised sector, which is accelerating with each passing quarter. This has delivered 48 percent growth in the company’s aftermarket segment compared to the corresponding quarter. The growth improvement in its international subsidiaries has been noticeable in the last four quarters, and it expects this to continue in foreseeable future with sustained improvement in EBITDA margins.
Meanwhile, the company's casting business, Lava Cast, saw a continuous ramp up in capacity utilisation. In Q2 FY2019 the capacity utilisation was around 60 percent compared to around 47 percent in Q1 FY2019, and this is to reach around 85 percent in H2 FY2019. Setco has already commenced supplies to new customers including Tata Motors and Ashok Leyland among others. It has also received approval from Daimler for supply of castings.