1
Please refer to important disclosures at the end of this report
1
1
Sundram Fasteners Limited (SFL), part of the TVS group is a leading
automotive component supplier. SFL's business performance benefitted from
improved domestic automobile demand, strong aftermarket growth and
uptick in export orders in fiscal 2017; exports grew at a healthy pace of 15%.
Despite annual capital expenditure (capex) of about `175cr to ` 200 cr, the
financial position is expected to remain at comfortable levels due to healthy
annual cash generation of ~`350-400cr and progressive debt repayment
over the medium term. SFL has introduced various new products such as
engine components, pump assemblies, powder metal parts, shafts and other
components which has resulted in product diversification and has reduced
dependence on fasteners. Consequently, share of fasteners in SFL’s revenue
dipped from 43% to sub-40% levels.Efforts to tap the emerging areas like
electric vehicles and an encouraging outlook for the PV and CV industry over
the next two years are expected to boost SFL’s revenue. SFL’s focus on high-
value products (transmission products) and better realisation segments
(electric vehicles) would lead to sustained higher margins going ahead. The
company has shown good consistent profit growth of 23.08% over 5 years
and has been maintaining a healthy dividend payout of 20.54%. It has been
able to generate healthy cash flows. SFL has a RoE 25.14% and is trading at
a valuation P/E of 24.85x of TTM FY17 earnings. Hence BUY.
BUY
CMP `390
52 Week High / Low
468/262.8
Avg. Daily Volume
39,018
Auto Parts
Market Cap (` cr)
8,204
1
BSE Sensex
31,196
Nifty
9,722
Face Value (`)
Reuters Code
SFNS.NS
SF:IN
1.4
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Sundram Fasteners Ltd
Others | Auto Parts
August 21, 2017
2
Sundram Fasteners Ltd |Auto Parts
June 5, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected]com Website: www.angelbroking.com
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Disclosure of Interest Statement Sundram Fasteners
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)