Sundram Fasteners - Aiming To Improve Cross-Cyclical Growth: ICICI Securities

ICICI Securities Report

We recently interacted with Sundram Fasteners Ltd.'s management for an update on their business strategy and outlook. Following are the key takeaways:

1. company is aiming at its revenue compound annual growth rate to exceed that of the original equipment manufacturer industry driven by product diversification within auto/electric vehicle segments, and focus on non-auto exports and expanding aftermarket sales;

2. emphasis on EV portfolio through products such as radiator caps, pinions, reduction shafts, bevel gears, etc. (Sundram Fasteners is currently a tier-II supplier for select passenger vehicle OEMs in addition to supplying differential gear assemblies to select tractor companies);

3. expansion in bevel gears and hot forging domains other (than wallet share gain from a key OEM), helped Sundram Fasteners grow its PV segment revenues much faster than industry in past three years;

4. inflation pass-on for exports is tougher as pricing contracts get renewed annually instead of monthly or quarterly (this results in ~20% under-recovery of overall cost inflation, which in turn impacts margins).

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