Any current/future new fundraising through debt or equity?

No immediate plans to add to the debt burden except for CAPEX related to Setco Automotive and Phase 1B expansion of Lava Cast. Debt repayments of existing loans will continue, aiming to reduce overall debt burden in coming years. Working capital improvements with increased operations and economies of scale will further reduce working capital blockage. Total debt as of March 2018 was about ₹375 crores (consolidated), with ₹150-175 crores as term loans and the balance as working capital limits. CAPEX plans include up to ₹60 crores over next 12-18 months mainly for plant upgradation. No explicit

Future growth expectations in sales/revenue/volumes?

**30% growth rate indicated for next year** due to a mix of strong OE demand and replacement demand. OE demand expected to grow by at least 15% minimum, driven by infrastructure development, mining, and road building. Exports expected to grow above 30% YoY for the next few years. Aftermarket growth to outpace OE, with aftermarket margins higher than OE margins, contributing positively to EBITDA. Implementation of BS VI norms from early 2020 expected to increase engineering content and product realizations, boosting margins by at least 500 basis points. Expansion and capacity doubling

Future growth expectations in earnings/operating earnings/profits/EPS?

Company targets 30% sales growth for FY19, driven by both OEM and replacement demand, with underlying commercial vehicle production growth above 20%. EBITDA margin expected to improve to 17%-19% by 2020, supported by cost control, better fixed cost absorption, and shorter RM inflation recovery cycles. BS VI implementation to increase engineering content in products, potentially improving margins by at least 500 basis points. Expansion and capacity utilization improvements at Lava Cast forecasted to enhance revenues and profitability. Farm tractor business expected to add 4-5 new OEMs in H1, co

Current/ Expected Orderbook/ Pending Orders?

The company is at various stages of approval (field and lab testing) for adding 4-5 new OEMs in H1 for farm tractors. Supplies have started to one OEM, and they expect 3-4 more OEMs to begin supplies within the first 6 months. OEM orders are strong, contributing to a confident growth outlook of around 20-30% for the upcoming year. There is a robust OE pipeline fueled by factors like tonnage upgradation and demand from infrastructure, mining, and road building sectors. Aftermarket and export orders are also improving, with exports expected to grow faster and contribute positively to EBITDA marg

Setco Automotive LtdQ4 FY18Auto Components

Setco Automotive Ltd Q4 FY18 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹14.85Market Cap: ₹199 CrSector: Auto Components

Management growth scorecard

Revenue

Category 2

Margin

Category 1

Fundraise

Yes

Order

N/A

Capex

Yes

3 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

30% growth rate indicated for next year due to a mix of strong OE demand and replacement demand.
OE demand expected to grow by at least 15% minimum, driven by infrastructure development, mining, and road building.
Exports expected to grow above 30% YoY for the next few years.
Aftermarket growth to outpace OE, with aftermarket margins higher than OE margins, contributing positively to EBITDA.
Implementation of BS VI norms from early 2020 expected to increase engineering content and product realizations, boosting margins by at least 500 basis points.
Expansion and capacity doubling at Lava Cast planned, which will improve machining revenues and overall turnover.
Introduction of new products for American aftermarket and farm tractor business progressing with new client approvals, adding to growth.
Strong replacement market potential in vehicles older than 8-9 years where current market share is lower, offering further growth avenues.

Margin guidance

Category 1

Company targets 30% sales growth for FY19, driven by both OEM and replacement demand, with underlying commercial vehicle production growth above 20%.
EBITDA margin expected to improve to 17%-19% by 2020, supported by cost control, better fixed cost absorption, and shorter RM inflation recovery cycles.
BS VI implementation to increase engineering content in products, potentially improving margins by at least 500 basis points.
Expansion and capacity utilization improvements at Lava Cast forecasted to enhance revenues and profitability.
Farm tractor business expected to add 4-5 new OEMs in H1, contributing to growth.
Exports anticipated to grow above 30% YoY, improving margin mix due to higher export realizations.
Long-term consolidated turnover target of Rs. 1000 crores by 2020, supported by multiple growth levers including aftermarket and international business.
Debt levels expected to reduce with improved working capital management and absence of major new debt.

See what Setco Automotive Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

Yes

No immediate plans to add to the debt burden except for CAPEX related to Setco Automotive and Phase 1B expansion of Lava Cast.
Debt repayments of existing loans will continue, aiming to reduce overall debt burden in coming years.
Working capital improvements with increased operations and economies of scale will further reduce working capital blockage.
Total debt as of March 2018 was about ₹375 crores (consolidated), with ₹150-175 crores as term loans and the balance as working capital limits.
CAPEX plans include up to ₹60 crores over next 12-18 months mainly for plant upgradation.
No explicit mention of any new equity fundraising in the provided text.

Order book

The company is at various stages of approval (field and lab testing) for adding 4-5 new OEMs in H1 for farm tractors.
Supplies have started to one OEM, and they expect 3-4 more OEMs to begin supplies within the first 6 months.
OEM orders are strong, contributing to a confident growth outlook of around 20-30% for the upcoming year.
There is a robust OE pipeline fueled by factors like tonnage upgradation and demand from infrastructure, mining, and road building sectors.
Aftermarket and export orders are also improving, with exports expected to grow faster and contribute positively to EBITDA margins.
Overall, growth drivers include OEM demand, independent aftermarket expansion, farm tractor business activation, and international business development.

See what Setco Automotive Ltd management said on order book — free account, 30 seconds.

Capex plans

Yes

- Setco Automotive plans a CAPEX of ₹50-60 crores for plant upgradation over the next 12 to 18 months to maintain its single-source supplier status for OEMs and meet demanding norms. - Additional investment of around ₹30-32 crores is planned for Lava Cast (foundry subsidiary) Phase 1B expansion to double capacity and improve machining capabilities. - The initial Lava Cast project cost was ₹180 crores (Phase I), with potential total investment increasing to ₹90-95 crores including Phase 1B. - No major CAPEX besides Setco Automotive plant upgrade and Lava Cast expansion is planned; term loan debt expected to remain more or less static with repayments being offset by new borrowings. - CAPEX focus also on increasing capacity and better cost management at Lava Cast, with growth opportunities targeting non-Setco customers. - Consolidated results include investments in subsidiaries like Lava Cast but exclude ventures like TransStadia. Overall, Setco is focusing on capacity expansion and technological upgrades aligned with future growth and BS VI norms readiness.

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