Sundram Fasteners hosted a conference call on May 8, 2023. In the conference call, the company was represented by: Mr. Dilip Kumar, Chief Financial Officer and Ram Prabhu, Deputy Manager.

Key takeaways of the call

In FY23, company witnessed growth across most of its divisions and verticals.

In Q4 FY23, domestic sales were at Rs 820.71 crore as against Rs 749.66 crore in Q4 FY22, posting a growth of 9.48% YoY.

Domestic sales for FY23 were Rs 3,235.04 crore as against Rs 2,631.22 crore during the previous year, recording a growth of 22.95% on the back of an increase in domestic demand.

Export sales for FY23 were Rs 1,528.95 crore as against Rs 1,421.09 crore during the previous year.

The export sales in Q4 FY23 stood at Rs 380.77 crore as against Rs 366.01 crore in Q4 FY22, an increase of 4.03% YoY.

Company incurred Rs 212.94 Crore towards capital expenditure as part of capacity expansion of existing lines of business and new projects.

Management indicated that inflation continues to be sticky and therefore expects to clock EBITDA margin around 17% in FY24.

During the quarter, company received its biggest contract in the EV segment worth $250 million, from a leading global automobile manufacturer for the supply of sub-assemblies for its electric vehicle (EV) unit.

Non-auto business contributed about one-third of standalone revenue in FY23.

Company is planning to bring more green energy into its energy mix. This will keep costs under control and address its ESG perspective.

Company reported that Cramlington Precision Forge its UK subsidiary has done exceedingly well from a loss position it has turned around.

Company’s customer mix has changed and it is selling more to customer where margins are high.

In Q4 FY23, Cars and utility vehicle contributed about 40% to domestic stand-alone business, commercial vehicle, LCV and engine contributed about 25%, tractors 10%, industrial segments represented balance 25%.

Capex for FY23 was about Rs 300 crore. Company is likely to spend Rs 700 crore as capex across fastener division, engine components business, powder metal and hot forging in next 2-3 years.

Company expects good pickup in the export revenue for wind energy. Wind energy business currently contributes 5% to total revenue.

Board approved payment of Second Interim Dividend of Rs 3.06 per share. Total Dividend including Special Dividend for the financial year 2022-2023 would amount to Rs 8.63 per share. Record Date for the purpose is 16 May 2023.

Company has successfully employee cost kept below 7% of its total sales, which is a good metric to achieve.

Management indicated Q2 and Q3 FY24 would be much stronger than Q1 FY24.