Sundram Fasteners : Globalisation is the key - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Sundram Fasteners : Globalisation is the key

Oct 6, 2000

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

SUPRAJIT ENGINEERING Announces Quarterly Results (3QFY21); Net Profit Up 65.6% (Quarterly Result Update)

Feb 11, 2021 | Updated on Feb 11, 2021

For the quarter ended December 2020, SUPRAJIT ENGINEERING has posted a net profit of Rs 516 m (up 65.6% YoY). Sales on the other hand came in at Rs 5 bn (up 23.0% YoY). Read on for a complete analysis of SUPRAJIT ENGINEERING's quarterly results.

WABCO INDIA Announces Quarterly Results (3QFY21); Net Profit Up 35.5% (Quarterly Result Update)

Feb 11, 2021 | Updated on Feb 11, 2021

For the quarter ended December 2020, WABCO INDIA has posted a net profit of Rs 524 m (up 35.5% YoY). Sales on the other hand came in at Rs 6 bn (up 28.5% YoY). Read on for a complete analysis of WABCO INDIA's quarterly results.

SCHAEFFLER INDIA 2018-19 Annual Report Analysis (Annual Result Update)

Nov 20, 2020 | Updated on Nov 20, 2020

Here's an analysis of the annual report of SCHAEFFLER INDIA for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of SCHAEFFLER INDIA . Also includes updates on the valuation of SCHAEFFLER INDIA .

EXIDE INDUSTRIES 2019-20 Annual Report Analysis (Annual Result Update)

Nov 6, 2020 | Updated on Nov 6, 2020

Here's an analysis of the annual report of EXIDE INDUSTRIES for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of EXIDE INDUSTRIES. Also includes updates on the valuation of EXIDE INDUSTRIES.

More Views on News

Most Popular

It's the Beginning of a New Bull Phase in Smallcaps (Profit Hunter)

Feb 24, 2021

Last time the smallcap index crossed 19k a big correction followed. Here's what makes it different this time.

Make Rs 5,000 Per Day Trading the Market (Fast Profits Daily)

Feb 25, 2021

In this video, I'll show you how to get started on the path to daily trading profits.

Charge Your Portfolio with this Smallcap Proxy Play on India's EV Revolution (Profit Hunter)

Mar 5, 2021

This could be the biggest wealth creator of the decade.

Gold 65,000 and Silver 84,000 in 2022

Feb 26, 2021

In this episode of the Investor Hour, India's #1 trader, Vijay Bhambwani, talks to us about the stock market, his new targets for gold and silver, the best long-term investment opportunity, and a lot more.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

COMPARE COMPANY

MARKET STATS