The stock price of Sundram Fasteners Limited (SFL) gained 3000 percent in 8 years
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updated on 1 Oct 2017
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The stock price of Sundram Fasteners Limited (SFL) gained 3000 percent in 8 years
One-fourth of this company is owned by retail and high net worth investors (HNIs). The 50-year old company has seen its market value swell from Rs 300 crore to nearly Rs 10,000 crore in eight-and-a-half years.

Sundram Fasteners Limited (SFL), a subsidiary of the Madurai-headquartered diversified industrial conglomerate TVS Group, is India’s largest manufacturer and exporter of fastener, a hardware device used extensively in cars and electrical equipments to mechanically join two or more objects together.
Shares of the company has delivered 3,100-per cent or 32 times return since March 2009, compared with a four-times expansion in the benchmark Sensex from a low of 8,160 hit in the wake of the global financial crisis. SFL, too, hit a multi-year low below Rs 14 in that crash, but rebounded quickly and has grown pretty fast from there to trade at Rs 450-odd level.

Analysts see more upside in the stock.

The company counts some of the top auto makers such as Daimler, Tata Motors, Ashok Leyland, M&M and electric power distribution firm Siemens among its clients. It is projected to see 10-13 per cent growth in revenue and 15-18 per cent growth in profit after tax over FY17-19. It doubled sales to Rs 3,290 crore in FY17 from Rs 1,569 crore in FY07. Profit expanded almost 10-fold to Rs 338.18 crore in FY17 from Rs 34.32 crore in FY07. The company has no debt on its balance sheet.

The company is projected to report higher margins in the coming quarters given its diversified product portfolio, which is geared to high-margin businesses that the company has built over past several years.
Valuation -
At its current price, the stock trades at 7.6 times its price/book value and 16.53 times its EV/PBIDT base, which is largely in line with peers. The stock trades at a P/E multiple of 27.60 times its FY17 EPS, which is at a discount to peers such as Motherson Sumi (32 times), Endurance Technologies (43.41 times) and Mahindra CIE (54 times).

The company commands a 35 per cent market share in the fastener segment, which brings in 40 per cent of its sales. The rest 60 per cent revenue comes from motor vehicle parts and accessories. The company’s export business has exhibited traction and are expected to improve further, led by an uptrend in the US passenger vehicles market, enhanced supply of new products and overall market share gains.

SFL completed a Rs 200 crore capital expenditure last financial year. Trying to diversify its customer base, the company has also started developing hot forged and wind turbine products. It expects the company to post revenue growth in the 10-13 per cent range and profit growth at 15-18 per cent over the next two years.