Reiterate Buy on Sundram Fasteners - Motilal Oswal

Sundram Fasteners Ltd (SF.IN; Mkt Cap USD 217m, CMP Rs 47, Buy)

Sundram Fasteners numbers were marginally better than our estimates on account of lower tax rate.

Revenue growth of 29% was driven by 30% rise in domestic revenues to Rs. 336 cr and 29% rise in exports to Rs. 109 cr.

Operating margins have been steady leading to a 30% rise in operating profits

Interest and finance costs have been impacted by a forex loss of Rs. 3 cr vs. a gain of Rs. 3.5 cr a year ago.

A lower tax rate at 20.5% vs. 29% aided a 31% profit growth. Tax rate was lower on account of increased sales from EOU and SEZ.

The performance of Subsidiaries continues to improve with a Dec-10 quarter revenue growth of 20% y/y to Rs. 145 cr with a Rs. 1.6 cr PBT vs. a loss of Rs. 6.1 cr a year ago.

We have marginally revised our earnings upwards on account of profits being higher than our estimates. We maintain our two year target of Rs. 105. Reiterate BUY.

Source : Equity Bulls

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