How has been the historical performance of Setco Automotive?

Revenue and Operating Performance

Setco Automotive’s net sales demonstrated a recovery and growth trend following a dip in fiscal 2021. From ₹359.26 crores in 2021, sales steadily increased to ₹718.63 crores by 2025, effectively doubling over four years. This growth reflects a rebound in demand and operational scale, with total operating income mirroring this upward trajectory. However, despite rising revenues, the company’s operating profit before depreciation, interest, and tax (PBDIT) has shown volatility. After posting negative operating profits in 2021 and 2022, Setco Automotive returned to positive territory in 2023 and improved further in 2024 and 2025, reaching an operating profit of ₹120.89 crores in the latest fiscal year.

Raw material costs and other expenses have also increased in line with sales, with raw material costs rising from ₹193.42 crores in 2021 to ₹311.95 crores in 2025. Employee costs have similarly escalated, reflecting workforce expansion or wage inflation. Despite these cost pressures, the operating profit margin improved to 15.19% in 2025 from negative margins in earlier years, signalling better operational efficiency.

Profitability and Margins

Despite improvements in operating profit, Setco Automotive has struggled with net profitability. The company has reported consecutive losses after tax from 2020 onwards, with the consolidated net profit declining from a marginal profit of ₹3.14 crores in 2019 to a loss of ₹105.09 crores in 2025. Earnings per share have correspondingly turned negative, reaching a loss of ₹7.86 per share in 2025. The net profit margin has remained negative, though it showed some improvement from a low of -59.19% in 2022 to -17.58% in 2025.

Interest expenses have surged significantly, rising from ₹52.59 crores in 2019 to ₹217.41 crores in 2025, which has heavily weighed on profitability. This increase in interest burden is linked to the company’s rising debt levels, with total debt climbing from ₹339.44 crores in 2020 to ₹1,115.56 crores in 2025. The growing leverage has contributed to negative gross profit after interest and depreciation, underscoring financial strain.

Balance Sheet and Financial Position

Setco Automotive’s balance sheet reveals a challenging financial position. Shareholders’ funds have turned negative, declining from a positive ₹105.03 crores in 2020 to a deficit of ₹693.82 crores in 2025. This erosion reflects accumulated losses and negative reserves. Meanwhile, long-term borrowings have increased substantially, indicating reliance on debt financing to support operations and growth. The company’s net block of fixed assets has decreased moderately over the years, suggesting some asset depreciation or disposals.

Current assets have remained relatively stable, with inventories and receivables showing minor fluctuations. Cash and bank balances have improved slightly to ₹20.49 crores in 2025, supported by positive cash flow from operating activities, which rose to ₹89 crores in the latest fiscal year. However, cash flow from investing and financing activities has been negative in recent years, reflecting ongoing capital expenditure and debt repayments.

Cash Flow Trends

Cash flow analysis indicates that Setco Automotive has managed to generate positive operating cash flows in recent years, with ₹89 crores in 2025, up from ₹25 crores in 2021. This improvement is a positive sign of operational cash generation despite net losses. Nevertheless, investing cash flows remain negative due to capital expenditures, and financing cash flows have been predominantly outflows, reflecting debt repayments and other financing activities. The net cash inflow was modest at ₹6 crores in 2025, indicating cautious liquidity management amid financial challenges.

Outlook and Considerations

Overall, Setco Automotive’s historical performance shows a company recovering its top-line growth and improving operational profitability, yet still grappling with heavy debt and sustained net losses. The rising interest burden and negative equity position highlight financial risks that investors should carefully consider. While recent improvements in operating margins and cash flows are encouraging, the company’s ability to return to sustained profitability and strengthen its balance sheet will be critical for future stability and growth.

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