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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 2016 quarter results
For the quarter ended June 2016, it registered a 13% growth in sales to Rs 713.00 crore.
Export sales grew 9%to Rs 246.52 crore, while domestic sales grew 15% to Rs 455.25 crore.
OPM jumped 490 basis points to 18.9% which saw OP rising 52% to Rs 134.75 crore.
Other income fell 12% to Rs 5.21 crore and interest cost rose 49% to Rs 14.26 crore. Interest cost includes forex loss of Rs of Rs 7.21 crore against Rs 4.64 crore.
As depreciation grew 7% to Rs 24.14 crore, PBT jumped 62% to Rs 101.56 crore.
EO loss stood at NIL against Rs 8.41 crore. Thus PBT after EO grew 88% to Rs 101.56 crore.
Tax provision grew 66% to Rs 26.01 crore. Finally, PAT ended up 96% to Rs 75.55 crore.
Profit margins grew due to volume growth
The EBITDA margin grew due to volume growth caused by market buoyancy, product mix and specific cost reduction initiatives of the company.
The interest cost was contained due to better working capital management.
Automotive and automotive component has shown 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 the prospect of a 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 from the USA also augur well for the export market.
Valuation
The share price trades at Rs 214.
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