Last Updated : Nov 05, 2018 10:19 AM IST | Source:

Buy Sundram Fasteners with target Rs 760: Anand Rathi

Sundram Fasteners expanding its capacity and making concentrated efforts to improve the product mix with focus on high-value products and increased contribution of exports.

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Started in 1966, Sundram Fasteners has grown into a global leader, manufacturing critical, high precision components for the automotive,

infrastructure, windmill and aviation sectors.

The company’s varied range of products encompasses fasteners, powertrain components, sintered metal parts, iron powder, cold extruded

parts, radiator caps and wind energy components.

An unwavering focus on delivering quality has won Sundram Fasteners Limited the trust of both OEM and aftermarket customers in highly

competitive markets like India, China, Germany, USA, UK, Italy, France & Brazil.

The company reported healthy results for the quarter ending June-18. Revenue from operations improved by 22.4% year-on-year to Rs. 9,710

million. The export sales for the Quarter ended were at Rs.3217 million as against Rs.2880 million during the same period in the previous year, an increase of 11.7%.

On profitability front, the EBITDA from operations for the quarter improved by 19.6% year-on-year at Rs. 1,766 million with a margin of 18.2%.

The company achieved the reported PAT of Rs. 1062 million, a growth of 17.8% year-on-year with a net margin of 10.9% translating into EPS of

Rs 5.05 per share. The Company has crossed the milestone of posting quarterly net profit of over Rs. 1000 million for the first time.

The company is significantly adding capacity and has incurred ~Rs.2000-3000mn capital expenditure in FY18. Management noted that most
of the capacity investment were incurred to dovetail production plans to those of key customers. Management expect to invest ~Rs.3500mn

in FY2019.

Sundram Fasteners expanding its capacity and making concentrated efforts to improve the product mix with focus on high-value products and increased contribution of exports. SFL is a quality ancillary player with robust return ratios and is poised to further improve its earnings growth


Anticipating the future growth potential of the Auto component industry and the positioning of SFL as a multi-product and multi-location

company, we feel that it has huge growth potential.

At CMP, the stock is trading 22.7x time FY19E and 18.9x FY20E earnings. We recommend buy with a target price of Rs 760 per share.
First Published on Nov 5, 2018 10:19 am