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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.
September 2017 quarter results
For the quarter ended September 2017, it registered a 10% growth in sales to Rs 813.72 crore.
OPM was steady at 18.9% which saw OP go up 10% to Rs 153.50 crore.
Other income jumped 205% to Rs 5.98 crore and interest cost grew 10% to Rs 13.48 crore.
As depreciation fell 4% to Rs 23.82 crore, PBT went up 17% to Rs 122.18 crore.
Tax provision grew 15% to Rs 31.75 crore. Finally, PAT grew 18% to Rs 90.43 crore.
Six months results
For the six months, it registered a 11% growth in sales to Rs 1602.54 crore.
Export sales grew 11% to Rs 561.87 crore.
OPM fell 20 basis points to 18.8% which saw OP grow 10% to Rs 301.00 crore.
Other income jumped 106% to Rs 14.80 crore and interest cost fell 26% to Rs 19.77 crore.
For the six months, other income includes foreign exchange gains of Rs 3.60 crore against Rs 3.19 crore.
As depreciation remained unchanged at Rs 48.63 crore, PBT went up 20% to Rs 247.40 crore.
Tax provision grew 25% to Rs 66.80 crore. Finally, PAT grew 18% to Rs 180.60 crore.
Capacities and Capital Expenditure
In FY 2017, the company incurred Rs 200.44 crore towards capital expenditure on existing and new projects. Capital investments were incurred to dovetail production plans to those of key customers.
The company made sizable investments in creation of capacities for new products and additional capacities for manufacture of existing products to meet projected demand from domestic and international customers.
Automotive and automotive component are showing promising growth
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 520.
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