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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 2014 quarter results
For the quarter ended December 2013, it registered a 4% fall in sales to Rs 476.45 crore. OPM jumped 330 basis points to 13.4% which saw OP rising 27% to Rs 63.62 crore.
Other income grew fell 46% to Rs 4.06 and interest cost fell 56% to Rs 9.76 crore.
Interest cost includes forex loss. Individually, interest cost has fallen 27% to Rs 7.15 crore and forex loss was down 79% to Rs 2.61 crore.
As depreciation jumped 7% to Rs 19.42 crore, PBT grew 124% to Rs 38.50 crore.
EO gain was nil against Rs 11.41 crore. Thus PBT after EO grew 35% to Rs 38.50 crore.
Tax grew 63% to Rs 9.87 crore after which PAT ended up 27% to Rs 28.64 crore.
Nine month results
For the nine month ended December 2013, sales fell 5% to Rs 1501.66 crore. OPM improved 10 basis points to 12.3%. Thus OP was down 5% to Rs 184.26 crore.
Sales for the Nine months ended 31st December, 2013 includes exports of Rs 553.04 crore (Last Year same period Rs 519.44 crore).
Other income grew 105% to Rs 42.35 crore.
Other Income includes foreign exchange gains of Rs 31.62 crore (Last Year same period Rs 11.34 crore).
Interest cost fell 23% to Rs 48.72 crore.
Interest cost includes forex loss. Individually, interest cost has fallen 27% to Rs 23.70 crore and forex loss was down 18% to Rs 25.02 crore.
As depreciation grew 6% to Rs 57.60 crore, PBT grew 24% to Rs 120.29 crore.
EO gain was nil against Rs 11.41 crore. Thus PBT after EO grew 11% to Rs 120.29 crore.
Provision for tax fell 10% to Rs 26.85 crore, after which nine month PAT grew 19% to Rs 93.44 crore.
Positive on export demand
The company expects that increase in exports to the US will offset slowing demand in India. The company does not intend to increase manufacturing capacity in India as the demand in the domestic market has been down
The company feels that it is seeing green shoots in the US. Despite single-digit growth it is however on a larger base
It supplies to General Motors, Ford Motor and Daimler AG among other vehicle makers
North American automakers are experiencing a rebound, and the company is well placed to take an advantage of it considering its capabilities, product portfolio, cost structure.
European markets, especially UK are also expected to recover in future.
The rupee devaluation will also shore up their profits.
Valuation
The share price trades at Rs 45
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