Buy Sundram Fasteners; target of Rs 1110: Sharekhan

Sharekhan's research report on Sundram Fasteners

Q2FY23 results missed estimates, driven by lower-than-expected EBITDA margin and higher other operating costs and staff costs. SFL maintains its capex program of Rs. 350 crores for EVs and select ICE vehicles over the next five years and additional Rs. 300 crores for wind energy business over the next two years. However, it defers its capex of Rs100 crore to FY24E. The stock trades at P/E multiple of 23.1x and EV/EBITDA multiple of 14.8x its FY2024E estimates.

Outlook

We maintain a Buy on Sundram Fasteners Ltd.’s (SFL’s) with a revised 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.