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A smallcap stock kicked off the week on a strong note, soaring 20 per cent -- its second such surge since May 7.

Many analysts remain upbeat about the auto component maker's scrip with some targets suggesting a further upside over the long term.

Bharat Seats (BHARATSE) shares rocketed 20 per cent to Rs 195.7 apiece in Monday's trade before closing at the same level -- coming within Rs 44 of their all-time high scaled in mid-October last year.

Sandeep Jain, Director at Tradeswift Broking, said the stock looks good fundamentally as well as on the technical charts.

Bharat Seats belongs to the same group as Sharda Motors and NDR Auto Components, with a strong promoter holding, he said, referring to the Rohit Relan Group.

At the end of the December quarter, promoters held a 74.66 stake in the company, including Maruti Suzuki India's 14.81 per cent shareholding.

According to Jain, there are four major fundamental tailwinds for companies operating in or related to the auto space:

Lower tariffs a big positive for auto companies

With the US-India trade deal in place, most analysts are upbeat about auto part export costs, also strengthening the auto space as a whole.

Jain believes that this is one of the major positive triggers for the stock.

Income tax cuts led to higher purchasing power

Income tax relief from Budget 2025 improved disposable income for individual tax assessees, improving their consumer spending on vehicles across segments.

GST 2.0 cuts a major boost

In September last year, the government announced a series of GST rate cuts while also reducing the number of slabs under the indirect tax regime to spur consumption.

Analysts say this is set to underpin demand for the next few years to come while prompting major auto makers to reduce vehicle prices.

Benchmark rate cuts

The auto sector is a rate-sensitive space, as lower borrowing costs.

Citing strong fundamentals, Jain pointed out that Bharat Seats' return on capital employed (RoCE) stands at 15-16 per cent with a three-year profit CAGR of around 40 per cent.

He also said that the company's quarterly performance was good.

The stock also looks technically strong, trading above its 200-day moving average (DMA), he said, adding that it offers a favourable risk reward.

Jain recommends buying the stock around Rs 162 for a target of Rs 210.

His target implies a 28.8 per cent upside from Friday's close.

Here are answers to a few frequently asked questions (FAQs) about this story:

How much did Bharat Seats rise on February 16?

The BHARATSE stock rose 20 per cent, matching an intraday surge last seen in May last year.

How close is the stock to its all-time high?

The stock came within Rs 44 of its record high scaled in mid-October last year.

What is Sandeep Jain’s view on Bharat Seats?

Sandeep Jain remains bullish on the stock, citing strong fundamentals and technical strength.

What is Bharat Seats’ promoter holding?

Promoters held a 74.66 per cent stake in the company as of the December quarter.

What is Maruti Suzuki India’s stake in the company?

Maruti Suzuki India holds a 14.81 per cent share in Bharat Seats.

What are the main tailwinds for the auto sector?

According to Sandeep Jain, US tariff cuts, income tax cuts, GST 2.0 reforms and repo rate cuts are seen as key growth triggers.

What are Bharat Seats’ key financial metrics?

The company has a RoCE of 15-16 per cent and a three-year profit CAGR of around 40 per cent, according to Sandeep Jain.