Current price 174.70

Sector Fasteners

No of shares 210128370

52 week high 219.00

52 week low 50.70

BSE Sensex 28469.67

Nifty 8634.65

Average Volume 45204

BSE Code 500403

NSE Symbol SUNDRMFAST

Sundram Fasteners Ltd.

Recommendation

– BUY/HOLD

Date – 19/03/2015

Company Overview

Sundram Fasteners Limited is a part of the US $5 billion TVS Group, headquartered in Chennai,

India. The Company has established a track record of leadership over 40 years. With a

diversified product line, world-class facilities in 4 countries and motivated team of talented

people, Sundram Fasteners has become a supplier of choice to leading customers in the

automotive and industrial segments worldwide..

The product range consists of high-tensile fasteners, powder metal components, cold extruded

parts, hot forged components, radiator caps, automotive pumps, gear shifters, gears and

couplings, hubs and shafts, tappets and iron powder. Over the years, the Company has

acquired cutting-edge technological competencies in forging, metal forming, close-tolerance

machining, heat treatment, surface finishing and assembly.

Manufacturing locations are supported by engineering and design personnel working on new

product design and development. It has operations in India, China, the United Kingdom,

Malaysia, Germany, and the United States. Understanding the global nature of business and the

need to provide quality products on “just in time” basis to customers, the company has

established supply chain logistics networks spanning several continents.

The current market capitalisation stands at Rs 3,721.37 crore. The company has reported a

standalone sales of Rs 575.46 crore and a Net Profit of Rs 30.13 crore for the quarter ended

Dec 2014.

Category No. of Shares Percentage

Promoters 104,085,280 49.53

General Public 55,802,805 26.56

NBFC and Mutual

Funds26,830,121 12.77

Financial

Institutions12,683,968 6.04

Foreign Institutions 5,881,397 2.80

Other Companies 4,571,033 2.18

Others 273,766 0.13

Market Cap (Rs Cr) – 3689.25

Company P/E (x) – 25.22

Industry P/E (x) – 28.07

Book Value (Rs) – 38.16

Price / BV (x) – 4.60

Dividend (%) – 170%

EPS (TTM) – 6.99

Dividend Yield (%) – 0.97%

Face Value (Rs) – 1

Share Holding Pattern Financial Details

Industry Overview

Fasteners form a vital part of any structure as they help in joining two or more components together. Economic

development in India has led to a rise in disposable income of consumers which in turn has resulted in

growing demand for automobiles. This factor is expected to be one of the primary reasons driving the growth

of the market. In addition, rise in construction and maintenance activities all across the world is expected to be

an important factor which will boost the demand for fasteners over the forecast period. Development of

fasteners which are customized for niche application segments such as railways and solar equipment is

expected to open opportunities for the growth of the market within the forecast period.

Automobile industry accounts for 75 per cent of the total demand of this industry followed by consumer

durables and railways. With the automotive industry witnessing a significant growth rate along with increasing

global demand, the future of the Indian fastener industry is very promising. Other OEM segments such as

electronic and electrical, fabricated metal products and aerospace equipments were the largest application

segments of fasteners and accounted for over 30% of the demand in 2011.

However, demand for fasteners is expected to be highest from construction on account of the rising

construction and maintenance activities worldwide. The construction application segment is expected to grow

at a CAGR of over 9% from 2012 to 2018. Automotive OEM sector is expected to show above average growth

within the forecast period.

Asia Pacific accounted for the highest demand for industrial fasteners in 2012 and is expected to account for

over 45% of the market by 2018. The trend is expected to continue over the next six years due to factors such

as rapid industrialization and favorable economic conditions, which is expected to boost the demand for

durable goods and other manufacturing and development activities.

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

Sources Of Funds

Total Share Capital 21.01 21.01 21.01 21.01 21.01

Equity Share Capital 21.01 21.01 21.01 21.01 21.01

Reserves 754.63 673.28 612.45 533.94 459.14

Networth 775.64 694.29 633.46 554.95 480.15

Secured Loans 306.09 338.93 344.19 649.66 369.39

Unsecured Loans 291.90 370.28 351.68 99.95 198.52

Total Debt 597.99 709.21 695.87 749.61 567.91

Total Liabilities 1,373.63 1,403.50 1,329.33 1,304.56 1,048.06

Application Of Funds

Gross Block 1,380.03 1,231.79 1,133.13 1,010.96 910.89

Less: Accum. Depreciation 597.56 524.16 460.34 403.15 350.75

Net Block 782.47 707.63 672.79 607.81 560.14

Capital Work in Progress 20.53 21.41 40.09 50.04 19.64

Investments 123.16 132.02 142.63 142.37 142.39

Inventories 290.18 321.18 323.98 286.93 209.53

Sundry Debtors 405.77 432.92 433.52 364.55 260.37

Cash and Bank Balance 9.21 10.59 6.71 8.13 4.65

Total Current Assets 705.16 764.69 764.21 659.61 474.55

Loans and Advances 217.82 219.55 189.66 144.07 121.21

Fixed Deposits 0.00 0.00 0.00 0.46 0.38

Total CA, Loans & Advances 922.98 984.24 953.87 804.14 596.14

Current Liabilities 435.10 408.29 448.62 277.54 253.52

Provisions 40.40 33.52 31.42 22.25 16.73

Total CL & Provisions 475.50 441.81 480.04 299.79 270.25

Net Current Assets 447.48 542.43 473.83 504.35 325.89

Total Assets 1,373.64 1,403.49 1,329.34 1,304.57 1,048.06

Contingent Liabilities 69.60 102.38 63.04 26.00 80.96

Book Value (Rs) 36.91 33.04 30.15 26.41 22.85

Balance Sheet

Profit and Loss Account

Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

Income

Sales Turnover 2,022.28 2,069.42 2,146.64 1,944.81 1,421.93

Excise Duty 0.00 0.00 0.00 136.42 88.07

Net Sales 2,022.28 2,069.42 2,146.64 1,808.39 1,333.86

Other Income 38.72 27.58 18.07 -1.26 15.43

Stock Adjustments -6.63 -3.18 39.81 25.99 2.27

Total Income 2,054.37 2,093.82 2,204.52 1,833.12 1,351.56

Expenditure

Raw Materials 1,107.88 1,192.65 1,290.26 1,064.77 761.60

Power & Fuel Cost 111.45 119.16 90.37 86.95 62.29

Employee Cost 218.23 201.91 184.24 158.97 124.27

Other Manufacturing Expenses 0.00 0.00 0.00 168.16 113.61

Selling and Admin Expenses 0.00 0.00 0.00 72.07 91.56

Miscellaneous Expenses 321.97 295.19 326.48 59.54 14.99

Total Expenses 1,759.53 1,808.91 1,891.35 1,610.46 1,168.32

Operating Profit 256.12 257.33 295.10 223.92 167.81

PBDIT 294.84 284.91 313.17 222.66 183.24

Interest 58.58 81.35 92.20 23.90 27.91

PBDT 236.26 203.56 220.97 198.76 155.33

Depreciation 76.37 71.62 63.61 54.54 47.48

Profit Before Tax 159.89 131.94 157.36 144.22 107.85

PBT (Post Extra-ord Items) 159.89 131.94 157.36 144.47 107.43

Tax 39.00 36.88 44.75 39.07 32.42

Reported Net Profit 120.89 95.06 112.60 105.18 75.43

Total Value Addition 651.65 616.26 601.10 545.68 406.72

Equity Dividend 35.72 29.42 29.42 26.27 18.91

Corporate Dividend Tax 4.20 4.82 4.67 4.36 3.17

Per share data (annualised)

Shares in issue (lakhs) 2,101.28 2,101.28 2,101.28 2,101.28 2,101.28

Earning Per Share (Rs) 5.75 4.52 5.36 5.01 3.59

Equity Dividend (%) 170.00 140.00 140.00 125.00 90.00

Dividend and Bonus History

Index and Company Price Movement Comparison

Company Forecast

Symbol Value Action

RSI(14) 75.469 Overbought

STOCH(9,6) 76.941 Buy

STOCHRSI(14) 52.559 Neutral

MACD(12,26) 36.330 Buy

ADX(14) 80.079 Overbought

Williams %R -22.825 Buy

CCI(14) 84.8056 Buy

ATR(14) 26.7893 High Volatility

Highs/Lows(14) 33.7929 Buy

Ultimate Oscillator 51.526 Buy

ROC 298.210 Buy

Bull/Bear Power(13) 80.7140 Buy

Technical Indicators

PBIT – 8.67 v/s 8.86

RoCE – 16.63 v/s 15.10

RoE – 15.1 v/s 13.2

Net Profit Margin – 5.83 v/s 4.53

Return on net worth – 15.58 v/s 13.69

D/E Ratio – 0.77 v/s 1.02

Interest Cover – 3.90 v/s 2.61

Current Ratio – 0.98 v/s 1.05

Reserves – 754.63 cr v/s 694.29 cr

PAT – 120.89 cr v/s 95.06 cr

Total assets – 1373.64 cr v/s 1403.49 cr

Net sales – 2022.28 cr v/s 2069.42 cr

Book Value – 36.91 v/s 33.04

Important Ratios (YoY)

Days BSE NSE

30 185.06 185.28

50 190.69 190.96

150 170.63 170.82

200 152.77 152.92

Simple Moving Average

Investment Rationalize

Leading player in Indian fasteners industry with TVS group as promoters and clientele includes major Indian

companies such as Ashok Leyland, BEML, Bajaj, Tata, TVS, M&M, Maruti suzuki and international players

such as Volvo, GE, GM, Volkswagen, Ford, Mitsubishi Motors, Bosch, Caterpillar, JCB, Siemens, etc.

Company has reduced its debts and increased its production capacity, which will help the company when the

demand for products picks up.

Reduction in crude oil prices and improvement in economic cycle will help the company as the sales of

automobiles and the demand for the products increases.

Company was able to perform well in adverse circumstances and current order book from major players

ensures the consistent in foreseeable future.

Improvement in economic situations in American and European countries will add significantly to the

companies revenue as more than 38% of the revenue comes from exports.

Reduction in prices in raw materials and manufacturing expenses will increase the profit margin of the

company and Sundram Fasteners have a good dividend history.

Price to Sales Ratio of the company stands at 1.82, which means company is reasonably priced, and the

past consistent performance and future growth prospects ensures the company is reasonably priced.

Increase in revenue from fully owned subsidiaries will add to the companies profits.