We maintain buy with target price of Rs 760 per share based on 33x FY19E EPS of 23 per share.
Anand Rathi
Sundram Fasteners' revenue from operations improved by 22.4 percent year on-year to Rs 971 crore.
The company achieved the reported PAT of Rs 106 crore, a growth of 17.8 percent year-on-year with a net margin of 10.9 percent. It is significantly adding capacity and has incurred ~Rs 200-300 crore capital expenditure in FY18. The management expects to invest ~Rs 350 crore in FY2019.
The company is expanding its capacity and making concentrated efforts to improve the product mix with focus on high-value products and increased contribution of exports.
Sundaram Fasteners is a quality ancillary player with robust return ratios and is poised to further improve its earnings growth momentum.
Anticipating the future growth potential of the auto component industry and the positioning of SFL as a multi-product and multi-location company, we feel that it has huge growth potential and thus we maintain buy with target price of Rs 760 per share based on 33x FY19E EPS of 23 per share.
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