Sundram Fasteners — ₹21,430 crore cap, ₹1,411 crore capex plan, and fasteners tighter than your dad’s old scooter
1) At a Glance
Sundram Fasteners (TVS Group) makes bolts, nuts, shafts, pumps, gears—basically the unsung heroes that keep cars, windmills, and even planes from falling apart mid-use. Latest quarter: ₹1,533 crore sales (+2.4% YoY) and ₹148 crore PAT (+4.6% YoY) with steady 16% OPM. Market cap ~₹21,400 crore, debt ~₹823 crore, ROCE ~17%. The company announced a ₹1,411 crore investment MoU in Tamil Nadu, targeting EVs, wind, and non-auto segments. Stock trades at ~39× earnings while delivering mid-single digit growth. Premium nuts, premium multiples.
2) Introduction
Think of Sundram Fasteners as the family member who never brags but quietly funds everyone’s wedding. Born out of the TVS dynasty, this company makes precision fasteners and critical auto parts—small in size, massive in importance. Every gear, engine shaft, water pump, and turbine hub probably has a Sundram fingerprint.
Yet, despite the boring image, it’s managed to build a global footprint: 60% of revenue is auto, ~40% is infrastructure, wind, aerospace, and exports. And OEMs (from GM to Hyundai to Daimler) don’t switch suppliers like you switch telecom plans. Stickiness = recurring revenue.
The downside? Growth in the last five years has been slower than Chennai traffic at 6 pm. Sales CAGR ~10%, profits CAGR ~11%. Meanwhile, the P/E multiple races ahead at 39×, as if Sundram is Tesla disguised as a bolt-maker. So the mystery is clear: is this a sleepy bolt company priced like a luxury EV, or a quiet compounder waiting for its EV mega-deals to kick in?
3) Business Model – WTF Do They Even Do?
Portfolio is a buffet of metallic seriousness:
Fasteners: High tensile bolts & nuts for automotive, wind turbines, aviation.
Cold Extruded Parts: Shafts, cams, gear blanks.
Hot Forged Components: Pinions, hubs, bearing rings.
Powertrain Components: Clutch hubs, sun gear shafts, turbine shafts.
Powder Metallurgy & Iron Powder: Structural parts, gears, synchronizers.
Translation: if it rotates, transmits, seals, or survives torque—it’s Sundram’s playground. The moat is engineering pedigree + global certifications + decades of OEM trust. Switching cost is huge; you don’t want your $30,000 car to break down because you saved ₹2 on bolts.
Question: Would you pay FMCG-like multiples for a company whose top-selling product is literally a nut-bolt?
4) Financials Overview
Metric
Latest Qtr (Jun’25)
YoY Qtr (Jun’24)
Prev Qtr (Mar’25)
YoY %
QoQ %
Revenue
1,533
1,498
1,531
+2.4%
+0.1%
EBITDA
247
247
225
Flat
+9.8%
PAT
148
143
124
+4.6%
+19.4%
EPS (₹)
7.06
6.75
5.92
+4.6%
+19.3%
Annualised EPS = ~₹28.2. At CMP ₹1,020 → forward P/E ~36×. Comment: Growth is crawling, valuation is sprinting.
5) Valuation – Educational Fair Value Range
A) P/E method
TTM EPS = ₹26 → Current P/E ~39×.
Forward EPS FY26E = ₹28–30.
Peer multiples: 25–30× (auto ancillaries with steady growth).
Fair range = 26×–32×.
Value = ₹730 – ₹960/share.
B) EV/EBITDA method
TTM EBITDA ~₹944 crore.
EV = ₹22,205 crore → multiple ~22.5×.
Fair range = 14–18× → EV ₹13,200–₹17,000 crore.
Equity value = EV − debt ≈ ₹12,400–₹16,200 crore.
Per share = ₹590 – ₹770.
C) DCF back-of-envelope
Avg FCF = ~₹400–500 crore annually (CMP/FCF ratio insane at 140×).
