Buy Sundram Fasteners; target of Rs 1110: Sharekhan

Sharekhan's research report on Sundram Fasteners

Though SFL missed our expectations in Q3FY2023, but the operating performance is expected to be better in Q4FY2023 on a sequential basis, led by improvement in export revenue and soft RM cost benefit with a lag. The increase in revenue from non-auto business, export business and EV business would translate into improvement in its performance as SFL has embarked a Rs 1000 cr capex over FY2023-2025. The stock trades at P/E multiple of 23.2x and EV/EBITDA multiple of 13.9x its FY2025E estimates.

Outlook

We maintain a Buy on Sundram Fasteners Ltd.’s (SFL’s) with an unchanged PT of Rs. 1,110, led by the company’s dominant position in the fasteners segment, diverse client base and product portfolios, established client relationships, and prudent capital allocation.

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