Sharekhan has given Buy recommendation for Sundram Fasteners with a target price of Rs. 700 in its research report issued on Feb 04, 2021
Sharekhan’s research report on Sundram Fasteners
We expect SFL to benefit from strong growth traction in the automotive industry with its clients well diversified across segments. Export and non-automotive segments continue to be the focus area with a strategy to de-risk business from cyclicality. We expect SFL’s earnings to grow by 86.8% in FY2022E and 42.8% in FY2023E, driven by a 25.2% revenue CAGR during FY2021E-23E and a 350-bps improvement in EBITDA margin. Stock trades at P/E multiple of 22.2x and EV/EBITDA multiple of 13.2x its FY2023E estimates.
Outlook
We maintain our Buy rating on Sundram Fasteners Limited (SFL) with a revised PT of Rs. 700, on a strong traction in business outlook and an upgrade in earnings estimates. Q3FY2021 results beat expectation on higher-than-expected demand and margin expansion.
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