This microcap auto ancillary stock has zoomed 70% thus far in December

Setco Automotive shares hit an over 31-month high of Rs 17.33, gaining 5% on the BSE in Wednesday's intra-day deal amid heavy volumes and quoting higher for the eighth straight trading session

Setco Automotive shares hit an over 31-month high of Rs 17.33, gaining 5 per cent on the BSE in Wednesday’s intra-day trade amid heavy volumes. The stock of the microcap auto ancillary company is quoting higher for the eighth straight trading session. Thus far in the month of December, it has zoomed 70 per cent from the level of Rs 10.22 that it hit on November 29.

 

At 12:37 PM, Setco Automotive was quoting 4 per cent higher at Rs 17.17, as compared to the 0.01 per cent rise in the BSE Sensex index. As many as 2.9 million shares, representing 2 per cent of the total equity of the company, have changed hands on the NSE and BSE. Currently, the stock is trading at its highest level since April 2022. It had hit a record high of Rs 74.15 on January 12, 2018, data shows.

 

 

Setco Automotive is a prominent manufacturer of M&HCV clutches and a premium supplier of truck products. The company has a diversified product portfolio within the commercial vehicle segment, offering brake linings, clutches, flywheels, lubricants, release bearing assemblies, and universal joints. The company has a subsidiary called LavaCast Pvt Ltd that makes advanced machined castings.

 

The sharp rally in the stock price of Setco Automotive was seen after the company on December 5 announced the successful export shipment of flywheels and covers to the US market, manufactured by LavaCast.

 

The shipment includes flywheels tailored for leading auto and auto ancillary players in the USA and covers design for aftermarket distributors and remanufacturers. In an exchange filing, Setco Automotive said this consignment represents a significant milestone in the company's export journey, as it looks to capitalise on the growing demand for high-quality automotive components in international markets.

 

The management firmly believes the worst is behind, and now is the time to reap the rewards of hard work. The competitive edge of LavaCast products, coupled with the higher margins offered by export markets, positions the company strongly for sustained growth. “As we expand our presence in both domestic and international markets, we remain committed to delivering superior quality and innovative solutions to our customers worldwide,” the management said.

 

Setco’s advanced LavaCast facility, equipped with a fully automated production line, played a pivotal role in manufacturing these flywheels and covers. The facility ensures precision, consistency and cost-efficiency, providing a competitive edge in global markets.

 

The US market offers significant growth potential, with exports commanding higher margins compared to domestic sales. Setco plans to scale up its international operations for clutches, flywheels and castings through LavaCast, which could contribute meaningfully to the company’s overall revenues.

 

Meanwhile, for the first half (April to September) of the financial year 2024-25 (H1FY25), Setco Automotive had reported a healthy operational performance with earnings before interest, tax, depreciation and amortisation (Ebitda) jumping 72 per cent year-on-year (YoY) to Rs 46.27 crore, while margin improved 509 bps to 14.4 per cent. The strong growth came mainly on account of increasing volumes in the aftermarket segment, apart from continuing efforts on cost savings and improved operational efficiencies.

 

Revenue from operations grew 11 per cent YoY to Rs 322.40 in H1FY25, as against Rs 290.9 crore in H1FY24, mainly on account of increase in sales to original equipment suppliers (OES) and aftermarket and introduction of Setco allied products.