The Hindu Business Line : Sundram Fasteners: Book profit

BUOYED by improved performance, the share price of the company has appreciated by about 30 per cent since the earlier buy recommendation (Stock Focus Column, edition dated June 16, 2002). Taking into account the sharp rise in share price in the past three weeks, existing investors could lock-in their profits by booking profits.

Taking into account the increase in automobile production in the quarter ended March 2003, the company is likely to report strong growth in earnings for the fourth quarter of the previous fiscal. Investors could use any upswing associated with improved performance to dilute exposures.

It is amongst the top producers of high-tensile fasteners. Its product-portfolio also includes radiator caps, powder metal parts, precision formed gears and other automotive components. Over the years, it has actively tapped the export markets, which now accounts for about 18 per cent of the turnover.

The company has a major business exposure to the original equipment segment of the automobile industry. Aided by the improvement in automobile production (domestic and global), the company has recorded a steady improvement in financial performance in the recent quarters.

For the three-month period ended December 2002, turnover increased by about 21 per cent to Rs.113.73 crore while post-tax earnings rose 43 per cent to Rs.10.03 crore. However, on a sequential basis, the performance has remained almost stagnant. In the second and third quarter of the previous fiscal, both the turnover and the post-tax earnings have recorded nominal growth.

Going forward, the signs of a slowdown in the global economic growth and automobile production could affect Sundram Fasteners performance. Though the company has the requisite fundamental strength to weather unfavourable business environment, existing holders could use the recent upswing in prices to book profit in Sundram Fasteners. However, fresh buying may be considered on the evidence of steady increase in automobile production, commercial vehicles and tractors in particular.

Article E-Mail :: Comment :: Syndication

Stories in this Section
BSNL's new tariff plans: Getting to the pulse of the consumer

Pricing of long distance calls

MF asset information: AMFI must make them comparable

Peer comparison beats benchmarks

SEBI must borrow the SEC stick

Steel revival package: Recasting to strengthen

Alliance MIP and Templeton MIP-Growth: No match for income schemes

Income fund expenses: Investors stuck with high costs

Tata Life Sciences and Technology: Pare exposures

Investing in fund of funds

Birla Equity Plan: Pare exposures