Sundram Fasteners Q2 net up 20%; firm plans EV foray in domestic market

Better profit number comes despite 54% spike in input costs; firm draws up Rs 250 cr capex plan for current financial year

Sundram Fasteners Ltd, a TVS Group company, has posted a 20 per cent rise in consolidated net profit for the quarter ended September 30, 2021 to Rs 124 crore, from Rs 104 crore during the July to September period in 2020-21.

The company’s revenue from operations during the period under review was up 40 per cent from Rs 889 crore in Q2 last fiscal to Rs 1,242 crore this year. The company has lined up a capital expenditure plan of Rs 250 crore for the current financial year and is betting on the electric vehicle segment in the domestic market too. Interestingly, the rise in net profit comes despite a 54 per cent increase in raw material costs from Rs 352 crore during the July to September quarter of 2020-21 to Rs 542 crore during the Q2 of the current financial year. Total expense too zoomed by 42 per cent to Rs 1,077 crore during the period under review as compared to Rs 758 crore during the Q2 of last fiscal.

Arathi Krishna, managing director of the company, said that though there was an impact of the rise in commodity prices, costs of other inputs and logistics attributable to oil price increase during the quarter, this was mitigated due to good price support from the customers and cost reduction measures. The company’s EBITDA margin on revenue from operations was seen at 17.6 per cent during the quarter. The consolidated earnings per share (EPS) for the quarter ended September 30, 2021 amounted to Rs 5.83 and was Rs 4.87 in the corresponding period last year.

Talking about the growth and the recovery, Krishna said, “We expect the auto industry to perform better once the second dose of vaccination is over. We are seeing strong double digit growth on the commercial vehicles side due to the low base.” She added that though the semiconductor issue has affected the sector overall and there was a rise in inventories, by the fourth quarter of the current financial year the chip crisis will ‘pinch the industry less’.

The company said it is betting big on electric vehicles in the domestic market in two-wheelers and three wheelers and has already started supplying to Europe and North America. Consolidated revenue from operations of Rs 2,355 crore for the half year ended September 30, 2021 also includes exports of Rs 826 crore, as compared to Rs. 445 crore during the corresponding period last year.

Krishna added that the Company is focussing on non-auto segments such as windmill, aerospace and defence sectors and wants to increase its share in revenue from 32 per cent now to 50 per cent.