Sundram Fasteners Limited — Q4 FY25 earnings call

Call held 6 May 2025

Management summary

Sundram Fasteners delivered a record-breaking FY25, hitting a major ₹5,000 crore revenue milestone and achieving its highest-ever annual profit. The company is aggressively diversifying into non-auto sectors like aerospace and wind energy to mitigate cyclicality in the automotive market. While facing headwinds from U.S. tariffs and a temporary slowdown in EV demand, management remains committed to its expansion plans, backed by significant capex and a strong order book from global OEMs.

Highlights

  • Annual revenue crossed the ₹5,000 crore milestone, closing FY25 at ₹5,231 crores

  • Q4 FY25 revenue reached ₹1,362 crores, the highest quarterly revenue in company history

  • Full-year Profit After Tax (PAT) stood at ₹517 crores, the highest in history, with 8% EPS growth

  • Non-auto segment now contributes approximately 33% of total revenue, with an aspiration to reach 50%

  • Aerospace revenue targeted to double from $3 million to $6 million in the coming year

  • Wind energy revenue targeted to grow from ₹300+ crores to ₹600 crores

  • Planned capital expenditure of at least ₹300 crores for FY26

  • EV business revenue target of ₹200-250 crores for FY26, despite recent slowdowns

Concerns

  • U.S. Tariff Uncertainty

Key financials

  1. Revenue ₹1,362 Cr
  2. PAT ₹134 Cr
  3. Annual Revenue ₹5,231 Cr
  4. Annual PAT ₹517 Cr
  5. EPS Growth 8% +8%YoY

What they filed

Q1 FY27: revenue up 19.6%, net profit up 9.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,289 1,257 1,354 1,350 1,338 +4%1,351 +7%1,502 +11%1,615 +20%
EBITDA214 203 204 222 226 +6%216 +6%234 +15%256 +15%
Net profit131 120 134 138 140 +7%122 +2%180 +34%151 +9%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Fasteners
    37.5% Revenue Share
  • Caps and Machined Assemblies
    30% Revenue Share
  • Non-Auto Segment
    33.3% Revenue Share
  • Domestic Market
    70% Revenue Share
  • Exports
    30% Revenue Share

Guidance & targets

Capex

  • Capital Expenditure Capex · FY26 · High confidence ₹300 crores
    we should be incurring another INR300 crores of capital expenditure, minimum.

    — Dilip Kumar, CFO

Revenue

  • Aerospace Revenue Revenue · FY26 · High confidence $6 million

    Previously $3 million → $6 million

    So from a current level of approximately 3 million, we will be looking at close to 6 million in the coming year.

    — Management

  • Wind Energy Revenue Revenue · next 3-4 years · Medium confidence ₹600 crores

    Previously ₹300 crores → ₹600 crores

    from a current level of INR300-odd crores, aspiration is to take it to INR600 crores in the wind energy space.

    — Management

  • EV Business Revenue Revenue · FY26 · Medium confidence ₹200-250 crores
    are we still targeting the INR200 crores, INR250 crores of revenue from the EV business in FY '26... we're just hoping that things will happen.

    — Management

  • Export Revenue Revenue · FY26 · High confidence $200 million
    the current year budget, we would be looking at close to say 200 million.

    — Management

Market Share

  • Non-Auto Revenue Mix Market Share · Medium Term · Medium confidence 50%

    Previously 33% → 50%

    while the aspiration is to take it up to 50%

    — Management

Risks & concerns

  • U.S. Tariff Uncertainty

    high

    Tariffs on specific parts are not yet clear, and major customers are still assessing the situation.

    Both acknowledged

  • EV Segment Slowdown

    medium

    Trade tensions and tariff concerns have caused pushbacks and delays in EV platform scaling.

    Both acknowledged

  • Inventory Buildup Costs

    low

    Significant inventory buildup in anticipation of U.S. demand has temporarily increased conversion and working capital costs.

    Management acknowledged

Areas of evasion (1)

  • Specific breakdown of tariff charges per product category was not provided as it is still 'work in progress'.

Q&A highlights

2 direct
Customer Switching Costs Direct
Switching cost is not an easy proposition for the customer because it requires product validation. And typically it takes more than a year and also a considerable amount of money.

Explains the high barrier to entry and customer stickiness in the OE business, protecting margins from low-cost competitors.

Asked by Rushabh Shah

Impact of U.S. Tariffs Partial
I think the OEMs are bracing themselves for their profits to take a hit because I think they are looking to bare the significant portion of the tariffs... they have been always been supportive of the supply chain.

Reveals that while tariffs are a concern, global OEMs are currently absorbing much of the cost, shielding suppliers like Sundram.

Asked by Abhishek Jain

EV Business Slowdown Direct
with these tariff issues coming up, there seems to be some delay and some slowdown in the EV side as well. But then from next quarter at least we are hoping that things would improve.

Acknowledges a temporary deceleration in the EV segment due to trade tensions, impacting short-term revenue targets.

Asked by Sahil Sanghvi

2 min read 5 chapters

Detailed narrative

Milestone Revenue and Record Profitability

Sundram Fasteners achieved a historic milestone in FY25, crossing ₹5,000 crores in annual revenue to close at ₹5,231 crores. Q4 FY25 was particularly strong, delivering ₹1,362 crores in revenue, the highest quarterly performance in the company's history. Full-year PAT reached ₹517 crores, supported by an 8% growth in EPS, marking the most profitable year for the company despite increased conversion costs from inventory buildup.

Strategic Pivot to Non-Auto Segments

The company is aggressively diversifying away from its traditional automotive base, with non-auto segments now contributing 33% of revenue. Management aims to increase this to 50% in the medium term, focusing on wind energy, railways, and aerospace. Aerospace revenue is expected to double to $6 million in FY26, with long-term plans to reach $12 million, while wind energy revenue is targeted to double to ₹600 crores.

Navigating Global Trade and Tariff Headwinds

Management acknowledged the uncertainty surrounding U.S. tariffs but noted that major global OEMs are currently absorbing a significant portion of these costs to protect their supply chains. The company has proactively built up inventory to meet U.S. demand, which has temporarily increased borrowings and working capital requirements. However, they expect margins to normalize as this inventory is liquidated in the coming quarters.

EV Business Trajectory and Challenges

The EV business is facing some temporary turbulence due to trade tensions, leading to delays in platform scaling. While the company still targets ₹200-250 crores in EV revenue for FY26, management admitted that the timeline for reaching the full potential of ₹450 crores is currently uncertain. Commercial sales have already started, but the pace of ramp-up depends on the abatement of trade tensions.

Capital Expenditure and Capacity Expansion

Sundram Fasteners invested approximately ₹396 crores in capex during FY25 and has planned a minimum of ₹300 crores for FY26. This investment is broad-based, covering traditional fasteners, aerospace, and wind energy components. The company recently invested ₹85-90 crores specifically in the wind energy business, which is now operational and meeting customer requirements, paving the way for further expansion.

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