Setco Automotive Research Report By HDFC Sec

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December 24, 2014 at 9:08 pm #1457

Vidhi Khanna
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Geared up for the CV upcycle

We hosted the management of Setco Automotive for a series of investor meetings. Setco is a leading supplier of MHCV clutches with 85% market share in the domestic market. The company’s strategy of setting up an independent aftermarket channel and backward integrating into ferrous castings products could act as strong earnings growth drivers over the next 2-3 years. Management has set an ambitious target of scaling revenues to Rs 10bn by FY17-18. Current valuations at 24.3x P/E on an LTM basis appear attractive, considering the company’s earnings are at near trough levels.

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