Recommendation from Auto Ancillaries sector

This section gives a recommendation of a stock having stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon.[EasyDNNnews:PaidContentStart]

Bharat Seats Ltd: OEM PARTNER ACCELERATES INTO NEXT AUTO GROWTH PHASE

HERE IS WHY
✓ SUV demand drives record output
✓ Kharkhoda plant expansion boosts capacity
✓ New Maruti-Suzuki model investments

I ndia’s automotive sector continues to be a vital pillar of the economy, supported by robust government initiatives such as the PLI scheme and “Make in India.” Despite a recent moderation in volume growth, the sector remains resilient. Passenger vehicle production has touched record highs, fuelled by robust SUV demand, which now accounts for 50 per cent of the market. The two-wheeler segment is also showing steady growth, supported by improving rural demand and a gradual recovery in consumer sentiment.

Looking forward, the industry outlook remains promising, underpinned by key growth drivers such as accelerating electrification, infrastructure expansion, targeted production incentives, and rising disposable incomes. For FY26, the passenger and two-wheeler segments are projected to grow at a high single-digit rate, while commercial vehicles are expected to see low-to-mid single-digit growth.

Established in 1986, Bharat Seats Ltd (BSL) is a prominent supplier of automotive seating systems and interior components in India. It is a joint venture between Suzuki Motor Corporation (Japan), Maruti Suzuki India Ltd (MSIL), Rohit Relan, and Associates. BSL’s offerings include complete seating systems for fourwheelers, two-wheelers, and railways. It also manufactures NVH (Noise, Vibration, and Harshness) products like carpets, as well as body sealing parts such as extrusions and windshield mouldings. Its metal range includes structural frames for two-wheelers, adding diversity to its product portfolio.

The company is undertaking significant expansion to enhance its manufacturing footprint and strengthen its role as a trusted OEM (Original Equipment Manufacturer) partner. A new plant, involving an investment of ₹53 crore, has been established in Kharkhoda (Haryana) within MSIL’s supplier park and commenced operations in April 2025. Additionally, BSL is investing ₹14 crore in upgrading and expanding its Bhorakalan facility, aimed at increasing capacity and improving operational efficiency. Furthermore, ₹30–35 crore has been allocated for developing new models and components for Maruti Suzuki and Suzuki Motors, ensuring strong future relevance.

In FY25, the company reported healthy growth, with revenue rising 20.81 per cent to ₹1,289 crore from ₹1,067 crore in FY24. Operating profit increased 22.95 per cent to ₹75 crore, while net profit surged 32 per cent to ₹33 crore, driven by strong demand and operational efficiency. In Q1FY26, revenue grew 8.69 per cent sequentially, but operating profit fell 4.4 per cent and net profit declined 19.4 per cent quarter-on-quarter, primarily due to margin pressures. Despite these short-term fluctuations, overall performance remains solid, backed by strategic investments and a strong client base.

BSL is valued at a PE of 20x, below the industry average of 29.5x. Over the last five years, it has delivered a 16 per cent CAGR in sales and a 40 per cent CAGR in profit, reflecting operational efficiency and strong execution. The company has maintained healthy returns with ROE at 18 per cent and ROCE at 15.6 per cent. Its long-standing association with MSIL and SMIPL (Suzuki Motorcycle India Pvt. Ltd.), where it serves as the sole supplier of two-wheeler seats, offers a strong platform to scale in EV and export markets. With capacity expansion, greater model diversification, and increased orders from MSIL, BSL is well-positioned to gain from operating leverage and improved earnings visibility. The combined stake by Maruti Suzuki and Suzuki Japan ensures financial stability and strategic alignment with India’s largest automobile manufacturer. Considering all the company's growth factors, we recommend a BUY.

[EasyDNNnews:PaidContentEnd] [EasyDNNnews:UnPaidContentStart]

[EasyDNNnews:UnPaidContentEnd]