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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 2017 quarter results
For the quarter ended December 2017, it registered a 20% growth in sales to Rs 848.13 crore.
OPM fell 60 basis points to 17.7% which saw OP go up 16% to Rs 150.39 crore.
Other income fell 83% to Rs 98 lakh and interest cost dived 96% to Rs 48 lakh against Rs 10.98 crore.
For the quarter, interest cost includes foreign exchange gains of Rs 4.30 crore against a loss of Rs 3.66 crore.
As depreciation grew 10% to Rs 24.27 crore, PBT went up 23% to Rs 126.62 crore. Tax provision grew 28% to Rs 34.96 crore. Finally, PAT grew 22% to Rs 91.66 crore.
Nine months results
For the nine months, it registered a 13% growth in sales to Rs 2450.67 crore.
Sales for the nine months include exports sales of Rs 842.56 crore against Rs 766.57 crore, up 9.9%.
Sales for the nine months include domestic sales of Rs 1536.62 crore against Rs 1352.86 crore, up 13.6%.
OPM fell 20 basis points to 18.6% which saw OP grow 13% to Rs 454.89 crore.
Other income fell 4% to Rs 12.28 crore and interest cost fell 46% to Rs 20.25 crore.
For the nine months, other income includes foreign exchange gains of Rs 0.09 crore against Rs 7.47 crore.
For the nine months, interest cost includes foreign exchange loss of Rs 3.97 crore against a gain of Rs 14.40 crore.
As depreciation grew 3% to Rs 72.90 crore, PBT went up 21% to Rs 374.02 crore. Tax provision grew 26% to Rs 101.76 crore. Finally, PAT grew 20% to Rs 272.26 crore.
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 540.
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