Sundram Fasteners delivered a resilient Q3 FY26, characterized by robust 18% domestic growth that offset headwinds in the export market. While North American exports are under pressure from 25-50% tariffs, the company is successfully diversifying into non-auto sectors like wind energy and aerospace. Management is maintaining a disciplined approach to margins and capex, aiming for double-digit revenue growth in FY27 despite the postponement of major EV programs by customers.
vs Q4 FY26
Notable Quotes from the Call
Most Confident Moment
Management's conviction in the wind energy expansion from ₹350cr to ₹500cr and the 50-60% growth in aerospace.
Least Confident Moment
The admission that EV programs have been 'by and large postponed' and will only see a 'trickle' in H2 FY27.
| Metric | Value | YoY |
|---|---|---|
| Revenue | ₹1.4K Cr | — |
| EBITDA Margin | 17.3% | — |
| PAT | ₹122 Cr | +1.6% YoY |
| PBT (Pre-exceptional) | ₹174 Cr | +13.7% YoY |
Segment Breakdown
| Metric | Latest | Trend |
|---|---|---|
| PAT (Standalone)(crores) | 140 | |
| Revenue(crores) | 5612 | |
| PAT(crores) | 580 | |
| EBITDA Margin | 17.3% |
| Category | Target | Priority |
|---|---|---|
| Revenue | Revenue Growth→10%+ | Medium |
| Revenue | Wind Energy Revenue→₹500 crores | High |
| Margin | EBITDA Margin→18% | High |
| Capex | Annual Capital Expenditure→₹250 crores | High |
| Volume | EV Ramp-up Timeline→H2 FY27 | Medium |
| Severity | Risk |
|---|---|
high | Tariff Pressures in North America Tariffs of 25% to 50% on iron and steel content products are impacting export contributions and volumes. Management |
medium | EV Program Postponements Customer programs in North America have been delayed, leading to under-utilization of dedicated EV capacities (currently sub-50%). Both |
low | Raw Material Price Volatility While RM prices have moderated, they haven't returned to levels that would allow a return to 19-20% margins immediately. Management |
Areas of Evasion(1)
Sundram Fasteners reported a strong 18% growth in the domestic segment, encompassing both OE and aftermarket businesses. This performance was driven by a robust presence in the M&HCV, passenger car, and tractor segments, which together constitute the bulk of domestic sales. Management noted that premiumization trends in SUVs are increasing the content per vehicle across their portfolio. However, overall revenue growth was tempered by a moderation in exports, which now stand at 25% of the mix compared to historical levels of 30-33%.
The company is facing significant 'tariff pressures' in North America, with some products attracting duties of 25% to 50% based on iron and steel content. This has led to a contraction in North American export share from 70% to approximately 60-62%. To mitigate this, management is aggressively de-risking the portfolio by expanding into European markets like Poland, Romania, and Sweden, where they are seeing strong RFQ activity. They are also focusing on the UK market, which they believe will be less impacted by demand contraction related to tariffs.
A key strategic highlight is the growth of the non-auto segment, which now accounts for 38% of total revenue. The wind energy business has scaled from ₹200 crores to ₹350 crores annualized and is targeted to reach ₹500 crores following further expansion. Aerospace is also witnessing rapid growth, with monthly revenues jumping from ₹2.5-3 crores to ₹5 crores, representing a 50-60% increase. These segments are noted for their higher margin profiles and are critical to the company's goal of reaching an 18-20% EBITDA margin.
Management provided a candid update on their EV projects in North America, stating that customer programs have been 'by and large postponed.' Consequently, dedicated EV and powertrain component lines are currently operating at sub-50% utilization. While the company expects a 'trickle' of EV revenue to begin in H2 FY27, they are currently repurposing interchangeable equipment to service ICE requirements. Overall company capacity utilization remains at approximately 60%, leaving significant room for operating leverage as demand recovers.
Despite an ₹11 crore exceptional hit related to the labour code, the company maintained stable profitability with a 9-month EBITDA margin of 17.3%. Management is targeting an intermediate margin of 18%, driven by high-margin aerospace and wind energy trickles and eventual export recovery. Capex is being managed prudently, with ₹350 crores planned for FY26 and a reduced ₹250 crores for FY27. Borrowings have decreased due to better working capital management and lower inventory levels, strengthening the balance sheet.