Sharekhan has given Buy recommendation for Sundram Fasteners with a target price of Rs. 994 in its research report issued on Aug 20, 2021
Sharekhan’s research report on Sundram Fasteners
SFL displayed strong performance in Q1FY2022, beating street expectations, led by robust operational performance, despite tough environment. Export and non-automotive segments remain the top focus areas for the management to de-risk business from cyclicality. We expect SFL’s earnings CAGR to improve by 32.3% during FY2021E-FY2023E, driven by a 26% revenue CAGR during FY2021E-FY2023E and a 20 bps improvement in EBITDA margin to 18.4% in FY2023E from 18.2% in FY2021, with ROCE progressing to 22.6% in FY2023E. The stock trades at P/E multiple of 25x and EV/EBITDA multiple of 15.1x its FY2023E estimates.
Outlook
We continue to retain our Buy rating on Sundram Fasteners Limited (SFL) with an unchanged PT of Rs. 994, led by the company’s strong performance outpacing the automobile industry’s growth through diversifying client and product portfolios, benefitting from its established client relationships, and prudent capital allocation.