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Sundram Fasteners (SFL) is a part of the TVS Group, headquartered in Chennai, India. The product range consists of high-tensile fasteners, powder metal components, cold extruded parts, hot forged components, radiator caps, automotive pumps, gear shifters, gears and couplings, hubs and shafts, tappets and iron powder. Over the years, the company has acquired cutting-edge technological competencies in forging, metal forming, close-tolerance machining, heat treatment, surface finishing and assembly.
June 2017 quarter results
For the quarter ended June 2017, it registered a 10% growth in sales to Rs 841.74 crore.
Domestic sales grew 7% to Rs 558.39 crore. Automotive component industry is heavily dependent on commercial vehicle segment for high volume sales and profits. Increase in production of light commercial vehicles and passenger vehicles resulted in improved domestic sales. The company's efforts to diversify customer base resulted in development of products for wind turbines and hot forged products.
Exports grew 15% to Rs 283.35 crore. The company's continued investments for manufacturing of new products are expected to result in further improvement in near future.
OPM fell 10 basis points to 17.5% which saw OP go up 9% to Rs 147.50 crore.
Other income jumped 69% to Rs 8.82 crore and interest cost fell 56% to Rs 6.29 crore.
The company has reduced the finance cost through a combination of competitive sourcing of funds and prudent working capital management.
As depreciation grew 3% to Rs 24.81 crore, PBT went up 23% to Rs 125.22 crore.
Tax provision grew 35% to Rs 35.05 crore. Finally, PAT grew 19% to Rs 90.17 crore.
FY 2017 results
In FY 2017, it registered a 12% growth in sales to Rs 3159.91 crore.
OPM jumped 360 basis points to 17.3% which saw OP rise 42% to Rs 547.24 crore. PBT jumped 60% to Rs 426.97 crore. EO loss stood at Rs 2.37 crore against Rs 45.60 crore. Thus PBT after EO grew 92% to Rs 424.60 crore.
Tax provision grew from Rs 7.10 crore to Rs 109.12 crore. Finally, PAT ended up 47% to Rs 315.48 crore.
Capacities and Capital Expenditure
In FY 2017, the company incurred Rs 200.44 crore towards capital expenditure on existing and new projects. Capital investments were incurred to dovetail production plans to those of key customers.
The company made sizable investments in creation of capacities for new products and additional capacities for manufacture of existing products to meet projected demand from domestic and international customers..
Automotive and automotive component are showing promising growth
The automotive industry and hence the automotive component market has shown promising growth and will continue to do so due to good monsoon, robust economic growth and higher disposable income available due to recent pay commission hikes.
Investing in other automotive component verticals will bolster the profitability
The company is actively investing in other automotive component verticals which will bolster the profitability of the company. The continued prospects of sourcing of Indian automotive components by the USA also augur well for the export market.
Valuation
The share price trades at Rs 414.
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