01 — At a Glance
The Fastener That Got Tangled in Tariffs
- 52-Week High / Low₹1,080 / ₹804
- Q3 FY26 Revenue₹1,359 Cr
- Q3 FY26 PAT₹122 Cr
- Q3 FY26 EPS₹5.78
- 9M FY26 PAT₹401 Cr
- Book Value₹193
- Price to Book4.39x
- Dividend Yield0.84%
- Debt / Equity0.18x
- 12M Return-9.77%
Auditor’s Opening Note: Sundram Fasteners posted Q3 FY26 revenue of ₹1,359 crore (+5.5% QoQ, +5.9% YoY). But here’s where it gets interesting: domestic growth was a blistering +18% YoY, while exports actually stumbled. Nine months PAT hit ₹401 crore. EV contracts worth $250 million and $150 million are sitting in the order book but won’t ramp meaningfully until 2H FY27. Meanwhile, management just dropped a 18% EBITDA margin target and is betting hard on wind energy, aerospace, and European de-risking. The stock is down -10.4% in 3 months. The business, however, is just getting interesting.
02 — Introduction
Precision Components for an Imprecise World
Sundram Fasteners. TVS Group. One of India’s largest auto component suppliers. Makes critical precision parts — fasteners, powertrain components, metal forms, radiator caps, pumps — that go into cars, trucks, tractors, wind turbines, aircraft, and increasingly, electric vehicles.
For years, the narrative was simple: OEM dependence (65-70% of revenue from CV and PV OEMs), moderate growth, steady cash generation, high capex intensity for capacity expansion. Boring, reliable, TVS-backed. The stock has delivered a mind-numbing 2.5% CAGR over 5 years and -5% over 3 years. Even in a bull market, it managed to underperform.
Then something changed. Domestic demand exploded. US tariffs hit exports. Management suddenly started talking about “de-risking the portfolio,” scaling wind energy from ₹200 crore to ₹500 crore annualized, ramping aerospace from ₹2.5 crore monthly to ₹5 crore, and sitting on ₹400 crore in EV contracts. The February 2026 concall revealed a company in active pivot mode — still dependent on automotive (62% of revenue), but deliberately diversifying away from North America (now 60% of exports vs 70% earlier).
The stock down -10.4% in 3 months. The business executing its most ambitious reshape in a decade. Classic disconnect, classic opportunity for patient investors who can stomach the tariff uncertainty.
Concall Note (Feb 2026): Management explicitly: “we are no longer dependent on America as much as before.” Translation: the US tariff shock woke them up, and now they’re hedging hard.
03 — Business Model: Precision, Complexity, Leverage
They Make the Bolts That Hold Your Car Together. Really.
Sundram Fasteners operates across multiple verticals, each with distinct economics. Fasteners (high tensile, wind energy-grade, aerospace-grade) account for ~40-45% of domestic revenue. Powertrain components — gears, shafts, clutches — pull from multiple OEMs. Pumps, radiator caps, metal forms, powder metallurgy products fill the rest. The complexity here is real: manufacturing high-precision, safety-critical components for OEMs across automotive, wind, aerospace, and defence requires world-class quality systems, tooling investment, and capex discipline.
The business is manufacturing-heavy (13 facilities in India, plus China and UK subsidiaries). Working capital is a perpetual pressure point — gross current assets at 160+ days as of Mar 2025, inventory days at 166 days (up from 145 in Mar 2024). Yet the company generates ₹550-600 crore in annual operating cash flow and reinvests aggressively. FY26 capex: ₹350-400 crore. FY27E capex: ₹250 crore steady-state.
Revenue exposure: Domestic ~66% (up from 58% in FY20), Exports ~34% (down from 42%). Within exports, North America declining as a proportion, Europe and ASEAN rising. EV and non-auto segments now 38% of revenue (vs 30% a few years back), with wind energy alone targeting ₹500 crore annualized.
Auto (Domestic)~62%Revenue Share
Exports~34%Revenue Share
Non-Auto~38%Revenue Share
Wind Energy~₹350 CrAnnualized
Capex Note: The company has spent ₹217.92 crore in just 9M FY26 alone. Full-year capex guidance: ₹350-400 crore. Post-FY26, expect ₹250 crore steady-state capex per annum. Most of this is growth capex (70-75%); remainder is maintenance. Revenue-to-capex leverage: management targets “1:1 is a safe bet” meaning every rupee of growth capex should generate one rupee of new revenue within 2-3 years.
💬 The company is scaling wind energy and aerospace aggressively. Do you think these adjacencies can meaningfully offset automotive cyclicality, or is it just cap-table noise? Drop your thoughts below.
04 — Financials Overview: Q3 FY26
The Numbers That Reveal the Domestic-Export Split
Result type: Quarterly Results (Q3) | Q3 FY26 EPS: ₹5.78 | Annualised EPS (Q3×4): ₹23.12 | Full-year FY26E EPS (9M pace): ~₹21-22
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 1,359 | 1,283 | 1,337 | +5.9% | +1.6% |
| Operating Profit | 240 | 229 | 227 | +4.8% | +5.7% |
| OPM % | 18% | 18% | 17% | Flat | +100 bps |
| PAT (Reported) | 122 | 120 | 140 | +1.7% | -12.9% |
| EPS (₹) | 5.78 | 5.70 | 6.62 | +1.4% | -12.7% |
The Tariff Hidden in Plain Sight: Q3 reported PAT of ₹122 crore looks flat YoY (+1.7%), but management explicitly said PBT dropped from ₹186 crore (Q2) to ₹174 crore (Q3) “primarily arises out of tariffs.” There was also an ₹11 crore exceptional charge (labour code). Before exceptions, PBT was ₹162 crore. The real story: revenue is growing modestly (+5.9% YoY), operating profit is up (+4.8%), but tariff pass-through headwind is real. EBITDA margin for 9M FY26: 17.3%. Management is guiding toward 18% as a medium-term target. Annualised Q3 EPS (₹23.12) sits well below consensus assumptions of ₹26-27 for FY26, reflecting the tariff drag and timing miss on EV ramps.
05 — Valuation: Fair Value Range
Is ₹846 Pricing in the Pivot, or Just the Pain?
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