Sundram Fasteners Limited (NSE: SUNDRMFAST) Q4 2025 Earnings Call dated May. 06, 2025
Corporate Participants:
Unidentified Speaker
Mukesh Saraf — Investor Relations
Dilip Kumar — Chief Financial Officer
Analysts:
Unidentified Participant
Rishabh Shah — Analyst
Abhishek Jain — Analyst
Sahil Sanghi — Analyst
Rajiv Bhansali — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome To Sundaram Fashner’s Q4FY25 earnings conference call hosted by Evan Dispark. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchdown phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Mukesh Saraf. Thank you. And over to you sir.
Mukesh Saraf — Investor Relations
Thank you Avirath. Good morning everyone. Keshe Saraf here from a vendorspaf. Appreciate everybody logging in from the management team. I’m pleased to host Mr. Dilip Kumar, Chief Financial Officer Mr. S. Bharatan, Executive Vice President Marketing Sar Ganesh, Vice President Finance and Projects. I’ll now hand over the call to Mr. Dilip for his opening remarks post which we’ll begin the Q and A. Over to you sir.
Dilip Kumar — Chief Financial Officer
Thank you Mukesh. Good morning to all. Welcome to a discussion on our annual refund for the financial year ended 30th of March 25th. The good news, we have crossed the milestone of 5000 crores this year in the company. We closed the year at 5000 crores. The other major item I would pick which I have noticed in the results also is the inventory buildup which we have made in anticipation of US demand from our key customers. Notwithstanding the tariff, things are not bad and we have built quite a bit of inventory in anticipation. It has also pushed up some of our cost conversion costs and as you also know that at any point in time we have large number of new products under development and we’ve also had a significant capital expenditure this year so a lot of spares to incur expenditure and we closed the year with the profit before tax of 668 crores and after accounting for the exceptional income of 12.5 crores which arose out of testing the performance of the overseas subsidies for impairment for which we had got a provision the earlier years we have reversed some of those provisions and we finished the year at 680 crores.
And after the affecting tax rates have slightly come down because of preparable tax assessments and we profit after tax at 517 crores which is 8% growth in the EPS in the highest history of the company. Coming to the quarterly performance again we registered 1362 crores which is highest for us for the quarter. And like I explained there has been a significant inventory buildup which has increased some of the conversion costs. And as inventory gets liquidated, we expect this to get corrected and both the contribution and the data margin to resume its normal trend and the picture cost.
Good news. Product has been stable across the borders and the borrowings have gone up because of the working capital buildup which we made in terms of inventory and receivables and also the higher capital expenditure. And we finished the quarter with NAFCA accounting for the substantial income at 134 crores, which again is the highest history of the company. And I think again all our subsidies have done reasonably well. Like I said, department testing was done and therefore the valuation came very positive and we took a credit for the exceptional income and both our domestic subsidies have done reasonably well.
With this, I bring my opening remarks to an end. We’re happy to take questions from the analyst.
Questions and Answers:
operator
Hello? Hello.
Dilip Kumar
Yes, we are happy to take the questions now.
operator
Okay, sir, I would request you to speak a bit louder. You’re not very audible.
Dilip Kumar
Yeah, as loud as possible, as close as possible to the phone. So I will do my best. I finished my opening remarks. Okay.
operator
We will start with the Q and A. Sir. Yes sir, thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rishabh Shah from Bugglerock pms. Please go ahead.
Rishabh Shah
Thanks for the opportunity and congratulations on a great set of numbers. Sir, in the previous call you mentioned that just by offering a lower price and a customer would not switch the business. So in a definition of fastener, when does a customer like a customer never ever switches his business. So what are the switching costs for business like syndrome? Smart not.
Dilip Kumar
Yeah, switching cost is not an easy proposition for a customer because it requires product validation and typically takes more than a year and also considerable amount of money. So the customers are always wary of switching from one customer, one supplier to another supplier for a few cents here and there they would rather work with the existing supplier due to some commercial reason. So it is not easy especially for a product like ours where it is a lot of design and valuation is there for customers to simply switch. It may happen in the aftermarket, but not in the OE business.
Mukesh Saraf
Just a follow up on that one in the aftermarket segment. How good is our.
Dilip Kumar
Can you Repeat your question please.
Mukesh Saraf
In the aftermarket segment, how good are we in the industry?
Dilip Kumar
I think we have done well last year as expected and March was a very good month. So as expected, April was a bit down. But on the aftermarket, by and large we’ve been expanding our network distribution as well as on the direct industrials. We are having a good growth.
Mukesh Saraf
Okay, so my second question is, in the previous call you mentioned that you have entered into spaces like aerospace and defense mainly to upgrade in terms of quality and global competitiveness. So how is that space working out for us?
Dilip Kumar
I think with respect to aerospace, we are present through partners and we supply materials to customers like either General Electric or hal. And these predominantly form part of usage of exotic materials. So under that space we are able to penetrate and gain share and grow the business. So from a current level of approximately 3 million, we will be looking at close to 6 million in the coming year and we have plans to grow that to 8 to 12 million. With respect to defense, I would say that we are still in the startup space with respect to development of parts and validation and customer aim.
Mukesh Saraf
Last question is what are the top three or four priorities you would have for the next three to four years?
Dilip Kumar
I think with respect to the top.
Dilip Kumar
Priorities, I think growing with our existing key customers, gaining share of business and working with them on their new platforms, either the conventionalized or the EV or whatever new models that are planned by the customer, we will work with them. Apart from that, we are focusing on non auto segment especially in the areas of wind energy, railways and aerospace. So these are the broad sectors or.
Dilip Kumar
Areas in which we will be working in the next three to four years.
Mukesh Saraf
Thank you so much.
operator
Thank you. The next question is from the line of Abhishek Jain from Alpha. Accurate. Please go ahead.
Abhishek Jain
Thanks for opportunity. How was the revenue mix in export versus domestic in this quarter? Hello.
Dilip Kumar
With respect to the revenue split, about 70% coming from domestic and 30% from exports. So that has been the quarterly mix for the current year.
Abhishek Jain
Okay. And in export, if you can throw some light, what kind of the tariff charges imposed on your product and how do you see the challenges over there at the current situation.
Mukesh Saraf
As far as tariff is concerned? I think it’s still working progress. Most of our customers, especially the major customers, have not yet responses as the tariffs from their specific parts are not very clear as yet and they are working out their responses. In fact, most of them have not even approached us with any proposal. But that said, we are definitely expecting customers to come to us on tariffs going Forward as of now only some customers, we don’t have much of an exposure or approach for any tariff related issues and the major customers are still assessing the situation.
Dilip Kumar
I think just to supplement Mehkadi, I think the OEMs are bracing themselves for their profits to take a hit because I think they are looking to bear the significant portion of the tariff. And I think we have also been hearing seeing the media that the prices, retail prices, consumer prices are going up. I think they have been always been supportive of the supply chain and that’s the positive statement which has emanated from the global region so far.
Abhishek Jain
And next question on this non auto segment as you are trying to focus on the expanding business in wind and aerospace, if you can throw the light, what is the current revenue or contribution from the non auto segment and what so medium to long term guidance for the revenue from non auto segment?
Dilip Kumar
I think with respect to non auto at the moment we would be close to one third of the revenue comes from the non auto decline. And while the aspiration is to take it up to 50% but the immediate focus is on growing the wind energy business where in our earlier calls we had mentioned about close to an investment of 85 to 90 crore. That project is up and running and we have been able to meet the customer requirements and based on the performance customers have come back and we are on the negotiation table for furthering the revenues and taking the next phase of action.
And with respect to next phase of action, we are also planning for further investment to grow the business. So from a current level of 300 and odd crore aspiration is to take it to 600 crores in the space.
Abhishek Jain
Okay. And my last question on the product wise standalone numbers like in a partners company assemblies and which segment you are more positive in terms of the growth in the next two years.
Dilip Kumar
I think with respect to growth we will be working on all the engines of Sukum’s product range be it partners, be it pumps and assemblies. So we will be growing in each of the segments along with the customer growth in terms of organic as well as growing the carrot business. It is not that we will be growing only one particular segment. There has not been our strategy. So we will work with the customer in all the product segments and if you look at partners where we are present 35 to 40% of the total revenue followed by cast and machined assemblies at 30%.
So we continue to work with the customer.
Abhishek Jain
Thank you sir. That’s all from my side.
Dilip Kumar
Thank you.
operator
The next question is from the line of Sahil Sanghi from Monarch Network Capital.
Sahil Sanghi
Yeah, good morning sir. Am I audible? Yeah. So my first question is with respect to whatever developments have happened on the tariff front and overall demand in the us I just wanted our understanding on are we still targeting with 250 crores of revenue from the EV business in FY26 and will that meaningfully scale up to its full potential? 450 crores in the next year. How should we see this scale up?
Dilip Kumar
I think at this point in time it’s a little bit but however even prior to these tariff concerns on the EV side we were just hoping that things would happen. There was some pushback and things have started moving now. But with this tariff issue 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. But still the last word is not said on that.
Sahil Sanghi
So you expect the commercial sales to start from 2 qfy 26. Is that understanding correct?
Mukesh Saraf
Can you repeat this question?
Sahil Sanghi
You expect commercial sales to start from 2 QFI 26. Is this understanding correct?
Mukesh Saraf
See I think with respect to commercial sales it has already started. So the product development approval and commercial sales have started. I think the question from your end was whether it would be at their targeted manufacturer. There we are seeing little bit of slowdown in view of the trump and tariff effects. But it will pick up as indicated by customers starting from Q2 and Q3 of current year.
Dilip Kumar
Another point is that well for capacity planning and capital expenditure purpose is they have a program life of five years.
Mukesh Saraf
But some of our best on past.
Dilip Kumar
Experience we know that some of the products have much longer life ScheDuling more than 10 years is one of the cases where you’ve been supplying products. So you don’t have to worry about the predefined time frame of four years or five years. This will have a fairly long cycle. These may be temporary turbulence in the market. Once we pay the attention a bit, the long term indications and position trend will continue.
Sahil Sanghi
Answer any kind of budgeted target for exports in this year FY26.
Mukesh Saraf
I think the current year budget you’ll be looking at close to 200 million. So that’s the number which we are looking at.
Sahil Sanghi
Got it, Got it. I’ll come back in the queue sir, if anything. Thank you sir. Thank you.
operator
Thank you. The next question, the line of Rajiv Bhansali from Omkara Capital. Please go ahead.
Rajiv Bhansali
So my question is regarding the Capex done this year which is around somewhere 396 crores. And can you post some light on the next year CAPEX form?
Dilip Kumar
Yeah. So based on the current indication and the internal plans which we have made we should be incurring another 300 crores of capital expenditure minimum.
Rajiv Bhansali
And what about the current CAPEX then? Did we improve the current capacities or. It was regarding the new non auto segments of aerospace and other you mentioned.
Dilip Kumar
This will be broad based. It will be for traditional partner business aerospace and also for the wind energy partners. This should be spent across all our businesses.
Rajiv Bhansali
And coming back to the inventory buildup you mentioned. So are you seeing some traction from the current clients or is it regarding the domestic market or regarding the exports you are seeing?
Dilip Kumar
We have built inventories while keeping the overseas market in there.
operator
Thank you. As there are no further questions I would now like to hand the conference over to the management for closing comments. Hello.
Dilip Kumar
Yeah. So we have nothing further to add and we thank all the analysts for having joined the call and we look forward to interacting with them. We must have conferences and in the coming quarterly calls.
operator
Thank you on behalf of Evendesk Spark. That concludes this conference. Thank you for joining us and you may now disconnect your lines.
Dilip Kumar
Thank you.
Mukesh Saraf
Thank you.