|
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.
Quarter results
For the quarter, it registered a 6% growth in sales to Rs 1008.30 crore.
OPM improved 10 basis points to 17.5% which saw OP go up 6% to Rs 176.25 crore.
Other income fell 45% to Rs 7.52 crore and interest cost went down 6% to Rs 7.97 crore.
As depreciation grew 19% to Rs 29.85 crore, PBT stagnated at 145.95 crore against Rs 145.72 crore. Tax provision fell 28% to Rs 36.41 crore (tax incidence fell from 34.7% to 36.41%). Finally, PAT grew 15% to Rs 109.54 crore.
FY 2019 results
In FY 2019, it registered a 17% growth in sales to Rs 4002.34 crore.
Domestic sales, net of excise duties were at Rs 2469.15 crore as against Rs 2146.76 crore, an increase of 15%, on the back of increase in production of commercial vehicles. In the aftermarket, the company expanded the dealer network so as to increase the sales penetration in industrial segments which led to increase in aftermarket sales.
Sales include exports of Rs 1382.99 crore (against Rs 1168.14 crore, up 18%) due to volume growth accompanied by a favourable exchange rate movement.
OPM improved 20 basis points to 18.4% which saw OP go up 19% to Rs 736.89 crore.
Other income grew 8% to Rs 31.94 crore and interest cost went up 20% to Rs 38.96 crore.
Other income for the year includes net foreign exchange gain of Rs 18.18 crore (against Rs 11.64 crore).
As depreciation grew 12% to Rs 109.85 crore, PBT went up 19% to Rs 620.02 crore. Tax provision grew 20% to Rs 182.90 crore (tax incidence grew from 29.3% to 29.5%). Finally, PAT grew 19% to Rs 437.12 crore.
Consolidated FY 2019 results
The consolidated financial results include the financial results of Sundram Fasteners Limited and the financial results of its subsidiaries and step down subsidiaries, TVS Upasana Limited, TVS Infotech Limited, Sundram Fasteners Investments Limited, Sundram Non-Conventional Energy Systems Limited, Sundram Precision Components Limited, TVS Next Private Limited, TVS Infotech Inc., USA, Cramlington Precision Forge Limited, UK, Sundram Fasteners (Zhejiang) Limited, Republic of China, Sundram International Inc., USA and Sundram International Limited, UK.
'Sunfast TVS Limited' has been incorporated as a new wholly owned subsidiary of the Company with effect from April 8, 2019
In FY 2019, it registered an 18% growth in sales to Rs 4557.90 crore and PAT grew 18% to Rs 458.97 crore.
Capital Expenditure
The company incurred Rs 442 crore towards capital expenditure on existing and new projects. The capital expenditure was incurred in order to augment capacities for meeting the increase in volume of business and in tandem with production plans of key customers.
Capacity expansion
While the SEZ Units I & II at Mahindra World City are fully operational, the Company has set up another SEZ Unit at Mahindra World City, (Unit III) which has commenced commercial production in January 2019. The unit manufactures and exports high-end parts forged and machined with close tolerances for crossovers and mini trucks.
The company is in the process of setting up a new SEZ unit at Sri City, Andhra Pradesh, to manufacture high precision engineering components. It will be used as a hub to consolidate foray into non-auto segment including off-road vehicles for export business.
Incorporation of a wholly-owned subsidiary
The new Defence Procurement Policy has created an excellent opportunity for the Indian manufacturing companies. Two defence corridors have been announced one in Tamil Nadu and other in Uttar Pradesh.
To further SFL's growth in non-automotive segments, the company has incorporated a new wholly-owned subsidiary named "Sunfast TVS Limited" on April 8, 2019.
The new company will focus on the Aerospace and Defence segments. The company has orders for forged, cast and machined parts for all terrain and land systems vehicles for defence. The Company will also focus on parts for armoured vehicles and trucks. The Company will continue to grow SFL's existing business in space vehicles and helicopter components.
Merger
The company has received an order from National Company Law Tribunal dated April 11, 2019 approving the merger scheme with respect to merger of Sundram Precision Components Limited, a wholly owned subsidiary with Sundram Fasteners Limited. The merger is effective subsequent to the year end.
Dividend
The Board had earlier during the year, declared an interim dividend of Rs 2.00 per share (200%) and the same was paid in November 2018. The directors have decided to pay a second interim dividend of Rs 3.10 per share (310%), which together with the interim dividend declared and paid earlier would amount to a total dividend pay-out of Rs 5.10 per share (510%) for FY 2019.
Valuation
The stock trades at Rs 525.
|