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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.
December 2016 quarter results
For the quarter ended December 2016, it registered a 16% growth in sales to Rs 709.32 crore.
Export sales grew 23%to Rs 260.50 crore.
OPM jumped 280 basis points to 18.3% which saw OP rising 37% to Rs 129.97 crore.
Other income jumped 328% to Rs 5.65 crore and interest cost fell 25% to Rs 10.98 crore. Interest cost includes forex loss of Rs 3.66 crore against Rs 9.69 crore.
As depreciation fell 2% to Rs 22.00 crore, PBT jumped 73% to Rs 102.64 crore.
Tax provision grew 105% to Rs 27.30 crore. Finally, PAT ended up 63% to Rs 75.34 crore.
Nine months results
For the nine months ended December 2016, it registered a 13% growth in sales to Rs 2160.53 crore.
Export sales grew 15%to Rs 766.57 crore. Domestic sales grew 13% to Rs 1358.80 crore.
OPM jumped 400 basis points to 18.7% which saw OP rise 44% to Rs 404.27 crore.
Other income fell 13% to Rs 12.83 crore.
Interest cost fell 22% to Rs 37.56 crore. Interest cost includes forex loss of Rs 14.40 crore against Rs 33.52 crore.
As depreciation grew 6% to Rs 70.85 crore, PBT jumped 72% to Rs 308.69 crore.
EO loss stood at NIL against Rs 8.41 crore. Thus PBT after EO grew 80% to Rs 308.69 crore.
Tax provision grew 83% to Rs 80.87 crore. Finally, PAT ended up 80% to Rs 227.82 crore.
Automotive and automotive component are showing promising growth
In the opinion of the company, 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 330.
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