Setco Automotive Q3 net profit drops by 35% at Rs 7.21 cr, Auto News, ET Auto

Setco Automotive Q3 net profit drops by 35% at Rs 7.21 cr, Auto News, ET Auto
NEW DELHI: Setco Automotive Ltd, the largest manufacturer of clutches for M&HCV in India, reported sales of Rs 160.42 crore in Q3 FY19, up by 10.1% YoY and EBITDA of Rs 23.27 crore in the quarter, up by 6.9% YoY.

The company posted Profit after Tax of Rs 7.21 Cr. in Q3FY19, down by 35% YoY due to the normal tax rate of 34% applicable in FY19 as compared to 21% in FY18 (actual rate was 8% in Q3FY18).

Harish Sheth, Chairman & Managing Director at Setco Automotive, said, “This quarter, the NBFC liquidity crisis has temporarily affected the growth rate of MHCV sector. This is more of a short term correction, however, the long term fundamentals remain robust. With the liquidity crisis abating and impending switchover to BS-VI norms, we expect the demand to pick up significantly from the first quarter of the new fiscal. The growth-friendly measures announced in the budget, coupled with the reduction in interest rates announced recently would give a further flip to the underlying growth drivers of infrastructure and GDP growth.”

Despite unanticipated liquidity crisis affecting MHCV industry sales and production, Setco’s sales from Original Equipment Manufacturer (OEM) segment grew by 9.9% and sales from Aftermarkets segment grew by 32.2% in this quarter.

LavaCast (a subsidiary of Setco) ramps-up its capacity utilization to 70% utilization in Q3 FY19 vs 60% in Q2 FY19 and is expected to move up to around 80% during Q4 FY19.

Additionally, with the recent inroads into the farm-equipment segment and the introduction of new generation clutches (ASD clutch) in US Aftermarket, the company is poised to grow significantly going forward.

The quarter witnessed a robust industry growth in OE segment for M&HCV, a strong order pipeline from both OES and Independent Aftermarket segments.

Improved segment mix, better efficiency (higher activity levels), and realisation of development efforts (farm tractor) will further enhanced EBITDA margin by over 100bps, the company said.

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