Harita Seating Systems

Transcription

1 For private circulation only Volume No. VIII Issue No. 23 Harita Seating Systems In driver s seat Rs 778 BSE Sensex : 31,892 Nifty-50: 9,974 FINANCIALS SALES OPM (%) OP OTHER INC. PBIDT INTEREST PBDT DEP. PBT EO PBT AFTER EO TOTAL TAX PAT EPS (Rs)* 1403 (12) (12) (12) (12) (12P) *Annualised on fully diluted equity of Rs 7.70 crore. Face value of Rs 10 each. EO: Extraordinary items (P): Projections. EPS is adjusted after EO and relevant tax Figures in crore. Source: Capitaline Databases Harita Seating Systems is a part of $7 billion TVS group. It provides complete seating solutions for driver and cabin seating for commercial vehicles, tractors and construction equipment, as well as passenger seats for buses across all segments and has established itself as a leader in these segments in the country for seating systems. Harita has a subsidiary company, Harita Fehrer Limited which is a joint venture between Harita Seating Systems Limited, and F.S Fehrer Automotive GmbH, one of the market leaders in automotive foam business in Germany, Europe. Has got dedicated assembly line for each of its product line Harita has six manufacturing locations in India. They are in 1) Hosur, Tamilnadu 2) Ranjangaon, Maharashtra 3) Jamshedpur, Jharkhand 4) Pant Nagar, Uttarakhand 5) Dharwad, Karnataka 6) Chennai, Tamil Nadu Its manufacturing units follow the best practices of Total Quality Management (TQM), Kaizen, and Lean manufacturing. Over the years, Harita has been reviewing and revising its manufacturing strategies aiming to improve its manufacturing capabilities. The company has facilities of Seat frame manufacturing, powder coating, upholstery cut and sew, and seat assembly. For seat assembly, it has got dedicated assembly line for each of its product line. The quality system at all its units aims to achieve total customer satisfaction. Harita has well developed supplier management system which aims at developing vendors for long term relationships. Steady June 2017 quarter standalone performance In June 2017 quarter, sales grew 11% to Rs crore. OPM improved 130 basis points to 6.2% which took OP up 41% to Rs 6.14 crore. Other income fell 38% to Rs 1.20 crore and interest cost jumped from Rs 1 lakh to Rs 23 lakh. As depreciation jumped 59% to Rs 1.72 crore, PBT grew 4% to Rs 5.38 crore. As provision for taxation fell 7% to Rs 1.48 crore, PAT went up 9% to Rs 3.90 crore. STOCK DATA BSE Code : BSE Group : B NSE Code : HARITASEAT Bloomberg : HARS IN Reuters : HASS.BO Par Value : Rs week High/Low : Rs 876 / Rs 508 Sector : Auto Ancillaries SHAREHOLDING PATTERN* Category % of equity Foreign : 8.91 Institutions : 0 Govt Holding : 0 Corporate Holding : 6.1 Promoters : Public & Others : Total : 100 * as on 31/12/2016. Source: Capitaline Databases

2 In FY 2017 standalone sales had grown 13% and PBT had soared 33% on improved profit margins, despite very high base. In FY 2016 the company had registered sales growth of 23% from Rs crore to Rs crore. OPM had improved from 3.8% to 6.0% and PBT during the same time had soared 195% from Rs 8.14 crore to Rs crore. Thus FY 2017 performance should be viewed in that backdrop of high base. In 2017, sales were up 13% to Rs crore. OPM improved 140 basis points to 7.4% which took OP up 38% to Rs crore. Other income fell 1% to Rs 9.69 crore and interest cost dived from Rs 1.48 crore to Rs 44 lakh. As depreciation grew 16% to Rs 5.11 crore, PBT grew 33% to Rs crore. EO gain was NIL against Rs 4.47 crore. Thus PBT after EO grew 12% to Rs crore. As provision for taxation jumped 115% to Rs 6.76 crore, PAT stagnated at Rs crore. In FY 2017, efficiency in supply chain was improved through inter-plant coordination and horizontal deployment of lean and other improvement initiatives across all plants. These initiatives, along with the implementation of various other cost reduction projects across functions enabled the company to have better profit margins. Harita Seating Systems is a part of $7 billion TVS group. It provides complete seating solutions for driver and cabin seating for commercial vehicles, tractors and construction equipment, as well as passenger seats for buses Has a very strong subsidiary Harita Seating Systems and its joint venture partner viz. M/s. F.S Fehrer Automotive GmbH, Germany (Fehrer) holds equity shares in the subsidiary Company viz. Harita Fehrer limited, Chennai in the ratio of 51:49. Harita Fehrer commenced its operations in January Harita Fehrer is a technology driven polyurethane foam pad supplier to automotive seat manufacturers, customer expectation have increased over the years and Harita Fehrer has established itself as a complete solution provider to seating system manufacturers in meeting this demand. Harita Fehrer has been developing Non-VOC (Volatile Organic Contents) foams for major automotive OEMs.. F.S Fehrer automotive Gmbh, is a leading European specialist for automotive interior components Since inception Harita Fehrer has evolved as a complete solution provider in all its product applications. Harita Fehrer was the first company to install light weighting solution technology of Long Fiber Injection with in-mould painted parts. Harita Fehrer started exports in 2015 catering to needs of international brands In 2017, while its standalone sales stood at Rs crore, standalone PBT stood at Rs crore. Against this, it reported consolidated sales of Rs crore and consolidated PBT of Rs crore. Standalone EPS for FY 2017 was Rs 32.4 and consolidated EPS stood at Rs Impressive consolidated FY 2017 performance despite adverse environment and high base The company aims to take advantage of the growing Tractor industry by offering platform products to leading tractor OEMs and thereby looks forward to win a large share of domestic sales 2

3 In FY 2016 the company had registered consolidated growth of 4% from Rs crore to Rs crore. OPM had improved from 6.2% to 8.4% and profit before tax (PBT) during the same time had soared 78% from Rs crore to Rs crore. Thus, FY 2017 consolidated performance should be viewed in that backdrop of high base. In 2017, consolidated sales were up 27% to Rs crore. OPM stood at 8.2% against 8.4% which saw OP grow 24% to Rs crore. Other income grew 62% to Rs 5.52 crore and interest cost dived from Rs 1.75 crore to Rs 52 lakh. As depreciation grew 7% to Rs crore, PBT grew 37% to Rs crore. EO gain was NIL against Rs 4.47 crore. Thus PBT after EO grew 23% to Rs crore. As provision for taxation jumped 47% to Rs crore, profit after tax (PAT) grew 15% to Rs crore. Minority interest jumped 30% to Rs 8.43 crore. Finally consolidated net profit grew 11% to Rs crore. In FY 2017 the company had faced postponement of orders from customers in exports and hence experienced de-growth in exports segment. Also in the case of domestic tractor segment, the company catered to the existing base of customers and experienced decline in line with the industry base. Thus despite the hurdles the company posted impressive financial performance. In FY 2017, the company s initiatives to introduce new refresh ideas in existing products was well received by leading customers both in OEM and aftermarket segment Elite list of customers Its customers in Commercial vehicles segment are TATA, Ashok Leyland, Nissan, AWM, Mahindra and Mahindra, Scania etc. In tractors, its customers are TAFE, John Deere, New Holland, Mahindra and Mahindra, escorts etc. In Construction Equipments, its clients are Kobelco, Hyuandi, BEML, Tata Hitachi, Leyland Deere, etc. For Bus passenger seats, its OEM clients are Volvo, Tata, marcopolo, SML Isuzu, Scania, Nissan, etc. Customers of its subsidiary includes Daimler, Toyota Gosei, Yongsan Automotive Interior Parts, Adient, Dymos, laer Corporation, mecaplast Group, Ather, Loncin, Royal Enfield, TVS, UM Motorcycles, Yamaha, Bharat Benz, L&t Komatsu, Mahindra Reva, Same Deutz-Fahr, Gabriel, Magmet, Marelli, Marl Exhaust Systems, Tenneco, etc. Has well equipped R&D center Harita has well equipped Research & Development center located in Hosur. It has been in the forefront in developing world class products with many firsts to its credit in Indian market. Some of them are: Foam-in-place (FIP), suspended driver seats for tractors. Delux bus passenger seats with calf support. Mechanical and Pneumatic suspended seats for commercial vehicles and offroad vehicles. Its capability of product development with computer aided design, prototyping and in-house testing enables it to be a one-stop-shop for the customer's requirements. Company continues to strengthen its position in export markets and has won significant new orders from overseas customer. The supplies are scheduled in

4 Harita has Research and development facilities of: Design and development: Concept design and styling, virtual design and engineering CAE/FEA, simulation, trim, textile development, physical testing and validation, tool development with series production. Prototyping and testing: Sheet metal press machine, road condition data acquisition equipment, servo hydraulic rig (single post), hysteresis machine, universal test rig, H point 3D manikin, vibration test system, pressure mapping, 3D measuring machine, lateral stability test, slider endurance test, ingress-egress test. Growth strategy is well in place The company aims to take advantage of the growing Tractor industry by offering platform products to leading tractor OEMs and thereby looks forward to win a large share of domestic sales. It positively looks forward to improve new product development lead time and effectively catapult growth in domestic tractor market in With respect to the CV OEMs, the company is taking steps to retain the sales growth by expanding customer base and increasing share of business in existing domestic customers. In FY 2017, the company's initiatives to introduce new refresh ideas in existing products was well received by leading customers both in OEM and aftermarket segment. The company plans to develop additional products to maintain its growth plans. The company has also put in place initiatives to improve product quality to support the growth plans. The company has initiated new product development activities to maintain the leadership position in the tractor segment in the domestic market. It continues to strengthen its position in export markets and has won significant new orders from overseas customer. The supplies are scheduled in As a leader in the bus passenger seats with a wide range of seats, the company has further strengthened its position with new product launches in North India. The market has well responded to these new launches and the company is gaining market share in this region. Valuation In FY 2018 we expect the company to register standalone sales and net profit of Rs crore and Rs crore respectively. On a small equity of Rs 7.7 crore (out of which 66.35% is held by the promoters) and face value of Rs 10 per share, standalone EPS for FY 2018 works out to Rs The scrip trades at Rs 778. P/E on FY 2018 projected standalone EPS works out to Notably actual consolidated EPS in FY 2017 was Rs Thus P/E on FY 2018 consolidated EPS will be lesser. As a leader in the bus passenger seats with a wide range of seats, the company has further strengthened its position with new product launches in North India. The market has well responded to these new launches and the company is gaining market share in this region In FY 2018 we expect the company to register standalone sales and net profit of Rs crore and Rs crore respectively 4

5 HARITA SEATING SYSTEMS: CONSOLIDATED FINANCIALS 1403 (12) 1503 (12) 1603 (12) 1703 (12) Sales OPM (%) OP Other inc PBIDT Interest PBDT Dep PBT EO PBT after EO Total Tax PAT MI Net profit EPS (Rs) * *Annualised on fully diluted equity of Rs 7.70 crore: Face value of Rs 10 each. EO: Extraordinary items EPS is adjusted after EO and relevant tax. Figures in crore. Source: Capitaline Databases HARITA SEATING SYSTEMS: STANDALONE RESULTS 1706 (3) 1606 (3) VAR. (%) 1703 (12) 1603 (12) VAR. (%) Sales OPM (%) OP Other inc PBIDT Interest PBDT Dep PBT EO PBT after EO Total Tax PAT EPS (Rs) * *Annualised on fully diluted equity of Rs 7.70 crore: Face value of Rs 10 each. EO: Extraordinary items. EPS is adjusted after EO and relevant tax. Figures in crore. Source: Capitaline Databases 5