Are Setco Automotive latest results good or bad?

Setco Automotive's latest financial results for the quarter ended September 2025 reveal a complex scenario characterized by both operational growth and significant financial distress. The company reported consolidated net sales of ₹179.01 crores, reflecting a year-on-year growth of 11.99% compared to ₹159.85 crores in the same quarter last year. This growth indicates an ability to secure orders and improve demand conditions in the auto components sector, despite the company's precarious financial position.
Operating profit before depreciation, interest, and tax (excluding other income) stood at ₹24.23 crores, resulting in an operating margin of 13.54%, which shows a year-on-year improvement of 111 basis points from the previous year. This margin expansion suggests enhanced cost management and operational efficiency, as evidenced by a reduction in employee costs.

However, these operational gains are overshadowed by a substantial interest burden, with interest expenses totaling ₹61.05 crores—over 2.5 times the operating profit. This led to a consolidated net loss of ₹26.65 crores for the quarter, marking a continuation of the company's loss-making streak that has persisted for seven consecutive years.

The financial health of Setco Automotive raises serious concerns, particularly with long-term debt amounting to ₹1,072.37 crores against negative shareholder equity of ₹693.82 crores. This situation indicates that the company is technically insolvent, with equity completely wiped out. The high level of promoter share pledging at 94.59% further underscores severe liquidity constraints, while institutional investor participation remains negligible at 0.08%.

In summary, while Setco Automotive has demonstrated revenue growth and operational improvements, these achievements are significantly undermined by an unsustainable capital structure and a crushing interest burden. The company has experienced an adjustment in its evaluation, reflecting the ongoing challenges it faces in achieving financial stability.