X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Sundram Fasteners : Globalisation is the key - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 6, 2000

    Sundram Fasteners : Globalisation is the key

    Sundram Fasteners Ltd (SFL), a professionally managed company has for the fourth consecutive year won the "GM supplier of the Year" award in FY2000. The prospects for the automobile ancillary industry are dull in the current year as demand has slackened in almost all automobile segments. Hence though the short term prospects for the company do not seem to be attractive, SFL has many positives to come out a winner in the long term.

    SFL, of the TVS group, is the largest manufacturer and exporter of high-tensile fasteners (HTF) in the country. Its product range includes HTF, automotive components, cold formed/extruded products, powder metal parts and radiator caps. It is the sole supplier of radiator caps, as well as powder metal parts to GM, USA.

    SFL's major domestic customers are Telco, Ashok Leyland, Maruti and Mahindra & Mahindra. SFL has the ability to produce a wide range of fasteners. As the domestic automobile segment has had a fluctuating performance in the past few years, the company is concentrating on exports to increase its revenues. On the export front the company has been quite aggressive and has focussed on tapping new markets and customers. In FY2000, due to the above efforts the company was able to increase its export sales by 13% YoY despite adverse market conditions. The company continues to export fasteners to Daimler Benz AG, Germany and Cummins Engine Company Inc, USA.

    SFL sales break up
    (Rs m) FY2000 % to sales FY99 % to sales
    High tensile fastener 2,728 63% 2,186 64%
    Automotive components 178 4% 145 4%
    Auto (cold formed & extruded parts) 369 9% 284 8%
    Powder metal parts 466 11% 336 10%
    Precision formed gear 324 8% 22 1%
    Radiator caps (No.s in lacs) 195 5% 178 5%
    Others 59 1% 289 8%
    Total 4,319 100% 3,440 100%

    Besides SFL to further increase its presence and consolidate its position in the auto ancillary segment, has acquired a 51.09% stake in Autolec Industries Ltd, a leading manufacturer of water and fuel pumps. As the products of Autolec are of high quality and there are business synergies, this acquisition will be beneficial to both companies. Autolec has also been focussing on exports and during FY2000 the company's exports grew by a robust 37% YoY and contributed to 9% of the company's total revenues. As the company is negotiating with two well known companies in Europe and one in America to supply pumps on a regular basis, the prospects for exports in the current year too look bright.

    With globalisation setting across the automobile segment and consolidation being the key in the auto ancillary segment, the supplier base is likely to be divided into three categories. Category one vendors like SFL are going to being manufacturing components themselves as well as would outsource from the category two and category three vendors. They would be responsible for the quality and timeliness of delivery of the products to the companies directly. This will result in higher margins for the category one companies as they would be the direct interface with the automobile manufacturers.

    SFL due to its high quality products, professional management, focus on exports and globalisation is likely to emerge a key winner in future. As competition is intense and global consolidation is setting in the automobile sector, companies with an export focus will definitely benefit.

    Though the prospects in the current year are not exciting, in the long term this company is worth looking at. SFL on the current price of Rs 401, is trading at 9.4xFY2000 EPS of Rs 42.8. Its is trading near to its 52 week low of Rs 372.

     

     

    Equitymaster requests your view! Post a comment on "Sundram Fasteners : Globalisation is the key". Click here!

      
     

    More Views on News

    Atul Auto: Demonetization Impacts Volumes and Profitability (Quarterly Results Update - Detailed)

    Mar 1, 2017

    Atul Auto has reported a 11.2% YoY decline in the topline while the bottomline has declined by 23% YoY.

    Bharat Forge Ltd: Subdued Performance, Recovery on Cards? (Quarterly Results Update - Detailed)

    Nov 22, 2016

    Bharat Forge has announced its financial results for the second quarter of the financial year 2016-17 (2QFY17). During the quarter, revenues declined by 20.1% YoY and net profits declined by 26.3%.

    Exide Industries: Good show amid the broad based recovery! (Quarterly Results Update - Detailed)

    Oct 28, 2016

    Good show amid the broad based recovery

    Endurance Technologies Ltd (IPO)

    Oct 4, 2016

    Equitymaster analyses Initial Public Offering (IPO) of Endurance Technologies Limited

    GNA Axles Limited (IPO)

    Sep 14, 2016

    Should you subscribe to GNA Axle IPO?

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    COMPARE COMPANY

    MARKET STATS