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SUNDRAM FASTENERS LTD

SUNDRAM FASTENERS LTD


fundamental stock 
Previous Close385.60
Open390.00
High406.65
Low390.00
VWAP399.03
EPS (TTM) 14.95
CEPS (TTM)21.44
PE26.48
PB4.12

 

Started in 1966, Sundram Fasteners Limited has grown into a global leader, manufacturing capital, high precision components for automotive, infrastructure, windmill & aviation sectors. Sundram Fasteners is part of renowned TVS group that has history of more than a century. Mr Suresh Krishna is the Chairman and Director of the company. HDFC Trustee Company is the largest non-promoter shareholder with ~7% holding. M.cap is 8,016 cr.
 

Investment rationale
 

Trusted player over the years: An unwavering focus on delivering quality has won Sundram Fasteners the trust of both OEM and aftermarket customers in highly competitive markets like India, China, Germany, USA, UK. Italy, France & Brazil. Over the last 10 years company’s topline & bottomline has registered a CAGR of 10.8% & 15.8%.
 

New unit to boost sales: Sundram Fasteners Limited has set up a new SEZ Unit at Sri City, Andhra Pradesh to manufacture and export high precision engineering components to a leading European manufacturer for onward supply to its global marquee OEM customers for their existing as well as new programs. The new unit will provide further impetus to the company's export thrust through an addition of products to its portfolio as well as diversifying its export customer base.

   Pent-updemandevident: The global pandemic has plagued the automotive sector (in fact the whole economy) with sales figure losing its growth traction. As the lockdown eases, it would be interesting to watch out whether the sales of Passenger Vehicle in India follow the trend similar to the Chinese PV sales market which saw a staggering rally from its lows, mostly powered by sentiment shift. Green shoots are emerging from the economic rubble as auto companies are witnessing increasing online inquiries.

 

Outlook & Valuation: The networth of the company has crossed the milestone of Rs. 2000 cr during the year. The significant decline in the volume of passenger & commercial vehicles during the year due to economic slowdown and the Coronavirus pandemic outbreak during March 2020 has impacted the sales performance during the fiscal year 2019 - 20. The Company has posted a healthy EBITDA percentage of 18% owing to operational efficiencies and cost control measures. We believe automobile sector has digested almost all the headwinds and pent-up demand likely to emerge that will turn beneficial for auto ancillaries and Sundram Fasteners is well-positioned to grab the opportunity. At cmp, the stock is trading at 36.8x on its 1-yr forward earnings.
 

Duration of recommendation: Short to Medium term.






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