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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.
March 2016 quarter results
For the quarter ended March 2016, it registered a 17% growth in sales to Rs 700.81 crore.
OPM jumped 410 basis points to 15.1% which saw OP rising 59% to Rs 106.17 crore.
Other income grew 42% to Rs 19.88 crore and interest cost fell 26% to Rs 18.52 crore. Interest cost includes forex loss of Rs of Rs 13.26 crore against Rs 20.15 crore.
As depreciation grew 3% to Rs 24.65 crore, PBT jumped 162% to Rs 82.88 crore.
EO loss stood at Rs 43.10 crore against Rs 10 crore. Thus PBT after EO grew 84% to Rs 39.78 crore.
Tax write back stood at Rs 35.61 crore against a provision of Rs 5.63 crore. Finally, PAT ended up 372% to Rs 75.39 crore.
FY 2016 results
For FY 2016, it registered 13% growth in sales to Rs 2686.96 crore.
Sales for the year ended March, 2016 includes exports of Rs 908.12 crore, up 1% against Rs. 898.71 crore.
Domestic sales, net of excise duties were at Rs 1649.37 crore as against Rs 1426.33 crore, an increase of 15.6%.
OPM improved 40 basis points to 14.3% which saw OP grow 15% to Rs 385.09 crore.
Other income jumped 47% to Rs 34.42 crore. Other income includes foreign exchange gains of Rs 18.82 crore (previous year Rs.1.13 crore).
Interest cost fell 26% to Rs 59.97 crore. Interest cost includes forex loss of Rs of Rs 39.75 crore against Rs 60.01 crore.
As depreciation grew 4% to Rs 91.81 crore, PBT grew 43% to Rs 267.73 crore.
EO loss stood at Rs 45.60 crore against Rs 10 crore. Thus PBT after EO rose 25% to Rs 222.13 crore.
Exceptional item of Rs.45.60 crore represents loss on account of disposal of shares in Peiner Umfornitechnik GmbH, Peine, Federal Republic of Germany, PUT Gnmdstucics GmbH, Peine, Federal Republic of Germany, and TVS Peiner Services, GmbH Peine, Federal Republic of Germany, and impairment of loans / investments in Windbolt GmbH, Hohenstein-Emstthal, Federal Republic of Germany, which is net of gain of Rs 181.94 crore on transfer of investments in subsidiaries Sundram Fasteners (Zhejiang) Limited, Zhejiang, People's Republic of China and Cramlington Precision Forge Limited, Northumberland, United Kingdom to subsidiary company, Sundram International Limited New Castle. United Kinstdom.
As tax fell 74% to Rs 10.96 crore, PAT ended up 56% to Rs 211.17 crore.
FY 2016 consolidated sales stood at Rs 3261.01 crore against Rs 3156.14 crore and consolidated PAT stood at Rs 122.02 crore against Rs 131.88 crore.
Sharp increase in aftermarket sales
There has been a sharp increase in aftermarket sales due to specific initiatives undertaken by the company. The company experienced a strong demand for its hot forged parts, power train components and wind energy fasteners. The company through continuous customer engagement and leveraging its manufacturing capability was in a position to fully utilise such opportunities. The above product lines contributed significantly to the growth in sales.
Well poised to take advantage of the business opportunities
The company is well poised to take advantage of the business opportunities due to steady investments in capacity creation over the years. The company expects an upsurge in the automotive sector in the long run, which augurs well for the performance of the company.
Milestone of Rs 200 crore net profit and over 1,000 crore net worth
FY 2016, witnessed achievement of significant milestones with Net Profit crossing Rs 200 crore mark, which is the highest since inception of the company.
In addition net worth crossed beyond Rs 1,000 crore.
Restructuring of International Operations
The company has restructured its international operations. It has created a new subsidiary called Sundram International Limited, based in United Kingdom.
The Chinese subsidiary Sundram Fasteners (Zhejiang) Limited and the UK subsidiary Cramlington Precision Forge Limited have become subsidiaries of Sundram International Limited.
As a part of restructuring, the company divested the German subsidiaries, Peiner Umformtechnik and its affiliates.
The company is confident that the restructuring measures will strengthen its balance sheet and improve its shareholder value.
Other details
The Directors at their meeting held on March 09, 2016, had approved payment of second interim dividend @ Rs. 1.30 per share (130%) of face value Re. 1 each absorbing a sum of Ra 32.01 crorre (including dividend distribution tax) for the FY 2016 and the same was paid to the shareholders on 28th March, 2016.
The Board had earlier declared first interim dividend of Re 0.85 per share (85%) of face of Re 1 each absorbing a sum of Rs 21.44 crores (including dividend distribution tax) for the financial year 2015-2016 and the same was paid on 24th November, 2015. Thus, the total dividend paid during the period under review aggregates to Rs 2.15 per share absorbing a sum of Rs 53.45 crore.
The Directors do not recommend any final dividend.
Valuation
The share price trades at Rs 164.
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