Sundram Fasteners Ltd, a leading auto parts manufacturer, is witnessing significant growth in its electric vehicle (EV) order book, securing around ₹4,000 crore worth of EV orders with more contracts in the pipeline. This surge reflects the accelerating transition to EV technology in India, driven by government subsidies, increased consumer awareness, and frequent product launches across various categories.
The Chennai-headquartered company supplies a range of components, including fasteners, hot-forged machine parts like bevel gears and pinions, battery coolant caps, and various types of shafts to original equipment manufacturers (OEMs) in the EV sector. Additionally, Sundram Fasteners is developing an electric water pump.
Robust Order Book
The current ₹4,000-crore order book is set to be fulfilled over the next 5-6 years, with expectations for growth as the company negotiates new EV orders. R. Dilip Kumar, Chief Financial Officer of Sundram Fasteners, highlighted during a recent earnings call that the company is in discussions with several customers to secure additional EV contracts.
Capex Plans to Support EV Business
To execute these orders, Sundram Fasteners is expanding capacity at its factories in Mahindra City and Sri City near Chennai. The company has planned a capital expenditure (capex) of ₹350-400 crore for the current year, primarily focused on the fastener division to meet export requirements and support the EV business. In FY23, the company incurred a capex of ₹343 crore, fully funded through internal accruals without any incremental borrowings.
Gradual Transition to EVs
Sundram Fasteners’ management envisions a gradual transition to EVs, starting with internal combustion engines (ICE) to plug-in hybrids, and eventually to fully electric vehicles. With a growing EV order book, the company expects the EV segment’s contribution to total revenue to increase from about 6% now to 10-15% in the coming years.
Expansion into Renewable Energy
To sustain growth and prepare for the expected reduction in content per vehicle due to the shift from ICE to EV, Sundram Fasteners is also expanding into non-automotive sectors such as renewable energy. The company is focusing on wind energy and supplying fasteners for industrial and off-highway applications. The wind power segment has the potential to double its revenue from the current ₹250 crore to more than ₹500 crore in the next 2-3 years. Consequently, the company anticipates the share of non-automotive revenue to increase from 30% to 50% over the next five years.
New Product Line: Copper Heatsinks
Sundram Fasteners is also venturing into a new product line with copper heatsinks, catering to automotive and consumer electronics sectors where system cooling and faster heat dissipation are critical. This product has potential applications in EVs, aerospace, defense, IT, telecommunications, and healthcare. “SFL is happy to announce its foray into a new product line, copper heatsinks serving marquee customers. This has greater potential for all EVs, aerospace and defense, IT and telecommunications and healthcare,” Kumar told BusinessLine.
Brokerage House Insights
According to a report by brokerage house Sharekhan, Sundram Fasteners has identified three key structural growth drivers for the long term: the beginning of execution of the ₹4,000 crore EV order book, ramp-up of the wind energy project, and the potential increase in the order book for the EV business as the management engages with multiple domestic and overseas customers.
Sundram Fasteners Ltd, a part of the TVS Group, is a prominent player in the automotive component manufacturing industry. The company has a diverse product portfolio and a strong presence in both domestic and international markets. With a focus on innovation and quality, Sundram Fasteners continues to drive growth and sustainability in the automotive sector.
