Sundram Fasteners plans Rs 1,000 crore capex to strengthen its business verticals

Sundram Fasteners (SFL), one of the leading auto component makers, has said that its capex of around Rs 1,000 crore across its business verticals will strengthen its various business verticals. The company also said that the industry is expected to be good during the third and fourth quarters.

During the recent analyst call, SFL's Chief Financial Officer (CFO) R Dilip Kumar said that the company has resumed its capex in 2022-23.
 
In the last AGM, the company has said it would spend about Rs 1,000 crore and the company spent about Rs 300 crore this year so far. "...and these, in line with our revenue growth, have been broad-based across our Fasteners division, our engine components business, our powder metal business, hot forging. We have spent across all of our verticals and also wind energy, most importantly. And the expansion is most likely to happen more in the next couple of years, in wind energy and in our hot forging vertical. The capex is likely to be in the wind energy space and the electric vehicle space,” said Kumar.

The company’s EV business has seen a surge to reach US$ 375 million now. Of the overall proposed capex, around Rs 300 crore will go towards the EV business.
 
The company has achieved a consolidated PAT of Rs 500 crore, for the first time, and also declared the highest payout in the history of the company. The dividend was Rs 8.63 per share. SFL's consolidated turnover has crossed the Rs 5,000 crore mark for the first time in its 60-year history. The company achieved a turnover of Rs 5,707.60 crore in 2022-23, compared with Rs 4,941.40 crore in the previous year–an increase of 15.5 percent.
 
“This growth has been broad-based across most of our divisions and also across all verticals, all segments, be it commercial vehicles, passenger vehicles, or stationary engines, tractors, all have done well for us”, said Kumar.
 
Commenting on non-auto businesses, Kumar said, they contribute one-third of the company’s revenues currently.

“The management has an aspiration to take that to 50%, to mitigate the cyclicality of the domestic commercial vehicles and passenger vehicles industry. So, currently, it stays at 1/3,” said Kumar.
 
Outlook
Speaking about the outlook, he said, the company expects good growth. As the government spends more on the infrastructure and the vehicle scrapping policy kicks in, and being an election year, SFL expects the second and third quarters to be much stronger than the first quarter. Growth in terms of revenue, he said, SFL will outbid the industry by 2-3 percent.

He noted, even this year, the industry has grown by 23 percent in the products, the space where SFL participates, while SFL grew by 26 percent.