Sundram Fasteners share price soars on strong Q2 results

Sundram Fasteners share price surged almost 6 per cent to on the NSE in intraday trade, after the company posted over 60 per cent year on year (YoY) growth in standalone net profit at Rs 76.93 cr for the quarter ended September 30, 2016 (Q2FY17). The auto parts & equipment firm had a profit of Rs 51.74 cr in the same quarter year ago.

Total revenue from operations grew 11 per cent at Rs 738 cr against Rs 660 cr in the corresponding quarter of previous fiscal. EBITDA or earnings before interest, taxes, depreciation, and amortization margin improved to 19.2 per cent in Q2FY17 from 15.7 per cent in Q2FY16.

At 02:17 pm, Sundram Fasteners share price was up 5.71 per cent at Rs 281.45 on the National Stock Exchange (NSE). The trading volumes on the counter stood at over 1 lac shares having a traded value of Rs 308.32 lac.

In order to know about the support and resistance levels of the scrip and also its fundamentals and financials, please a pay a visit to Sundram Fasteners share price history. 

Bank on Sundram Fasteners for latest Diwali Bonanza

Sundram Fasteners Limited is a flagship company of the US $6 billion TVS Group, headquartered in Chennai. The company is a manufacturer of automotive and engineering components and is the first Indian company to be ISO 9000 certified. All operations of Sundram fasteners are ISO 9000, IS 14001 & TS 16949 certified. Analysts are positive on the stock and suggest including it in the portfolio this Diwali.

Why Buy?

Sundram Fasteners share price has surged 78% as compared to 3% rise in the Sensex and 5% rise inNifty in past one year.

The company has shown a track record of leadership for over 40 years with a varied product line, world-class facilities across four countries and a motivated team of talented people. The company has become a preferred supplier to leading customers in the automotive and industrial segments worldwide.

Its product range consists of high-tensile fasteners, cold extruded parts, powder metal components, hot forged components, gear shifters, radiator caps, automotive pumps, gears and couplings, hubs and shafts, tappets and iron powder. Over the years, Sundram Fasteners has gained cutting-edge technological competencies in forging, close-tolerance machining, heat treatment, metal forming, surface finishing and assembly. Manufacturing locations are supported by engineering and design personnel working on innovative product design and development. Perceiving the Global nature of business and the need to provide quality products to blue-chip customers, the company has set-up a supply chain logistic network extending across several continents.

 

Behind the Industry curtains:

The Indian auto-components industry has witnessed a vigorous growth over the last few years. Some of the factors attributable to this include an upbeat end-user market, enhanced consumer sentiment and return of adequate liquidity in the financial system. The auto-components industry accounts for almost 7% of India’s Gross Domestic Product (GDP) and retains as many as 19 million people, both directly and indirectly. A steady government framework, large domestic market, increased purchasing power, and an ever rising development in infrastructure have made India a favorable destination for investment.

 

The Indian auto-components industry can be largely classified into the organized and unorganized sectors. The organized sector provides to the original equipment manufacturers (OEMs) and consists of high-value precision instruments, while the unorganized sector consists of low-valued products and looks mostly after the aftermarket category. 

Over the last decade, the automotive components industry has grown three times to US$ 40 billion in 2015 while exports have scaled even faster to US$ 11 billion. This has been driven by strong growth in the domestic market and escalating globalization, including exports, of several Indian suppliers.

 

ICRA Limited has projected the growth 0f 8-10% for the Indian Auto Component industry in FY 2017-18, based on higher localization by Original Equipment Manufacturers (OEM), higher component content per vehicle, and rising exports from India. According to the Automotive Component Manufacturers Association of India (ACMA), the Indian auto-components industry is projected to register a turnover of US$ 100 billion by 2020 supported by strong exports ranging between US$ 80- US$ 100 billion by 2026, from the current US$ 11.2 billion.

The Quarterly blast:

• Company’s revenue has jumped by 2.01% QoQ from Rs. 688.03 crs to Rs. 701.88 crs and 12.91% YoY in Q1FY17.
• The operating profit margin is 15.76% in quarter ended June16.
• Net profit margin was at 10.76% for June 16 Quarter.
• Operating Profit Jumped 35.68% QoQ and 68.28% in YoY.
• Net Profit jumped 78.64% YoY.

 

Road Ahead 

The quickly globalizing world is opening up newer routes for the transportation industry, especially while it makes a move towards electric, electronic and hybrid cars, which are set to be more efficient, safe and reliable modes of transportation. Over the next ten years, this will lead to newer directions and opportunities for auto-component manufacturers, who would be required to adapt to the change through the systematic research and development.

The Indian auto-components industry is set to turn out to be the third largest in the world by 2025. Indian auto-component makers are well placed to benefit from the globalization of the sector as exports potential could be increased up to four times to US$ 40 billion by 2020.

To read the Research Report on the stock Kindly visit Sundram Fasteners Research Report.

Sundram Fasteners Share Price makes New High after Q1 Results

Sundram Fasteners extended gains to jump 10 per cent to Rs 234 after surge of over 10 per cent in the previous session because of robust June quarter earnings. Sundram Fasteners share price has made a new 52 week high of Rs 245.35 in today’s trading session. The share price is currently trading at Rs 234.75, 5.72 per cent. The net profit of the Company nearly doubled to Rs 75.55 crores for the quarter ended 30^th June, 2016 (Q1FY17), as a result of strong operational performance.

The TVS Group Company is engaged in auto parts and equipment business had profit of Rs 38.51 crores during the corresponding quarter of the previous year. The total revenue from operations during this quarter jumped up by 12.8 per cent to Rs 713 crore from Rs 631.94 crore in the corresponding quarter of previous year.

The EBITDA (earnings before interest, depreciation and taxes) margin also expanded around 465 basis points to 19.63 per cent from 14.98 per cent, due to volume growth, product mix and specific cost reduction initiatives.

The company was actively investing in other automotive component verticals, the company announced, continued prospect of sourcing of domestic auto components from United States augurs very good for overseas market.

The company declared that it is positive about the automotive sector with the monsoon as well as sentiment buoyancy improving prospects. "Sundram Fasteners is also actively investing in other automotive component verticals which will bolster the profitability of the company," the company said in a statement. "The continued prospect of sourcing of Indian automotive components from the USA also augurs well for the export market."