Sharekhan has given Buy recommendation for Sundram Fasteners with a target price of Rs. 850 in its research report issued on Mar 10, 2021

Sharekhan’s research report on Sundram Fasteners

Interaction with the management indicates that strong growth traction in automotive industry led by growth in sales of commercial vehicles, tractors, passenger cars and two wheelers. 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 improve by 60.1% during FY21E-23E, driven by a 25% CAGR during FY2021E-23E and a 360-bps improvement in EBITDA margin. Stock trades at P/E multiple of 25.2x and EV/EBITDA multiple of 15.1x its FY2023E estimates.

Outlook

We maintain our Buy rating on Sundram Fasteners Limited (SFL) with a revised PT of Rs. 850, factoring in better multiples on a strong traction in business outlook and an upgrade in earnings estimates.

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