Sundram Fasteners Limited expects Stellantis business to triple

Sundram Fasteners Limited expects its Stellantis business to reach Rs 150 crore to Rs 175 crore this year, compared with about Rs 50 crore last year, as billing begins for plug-in hybrid and internal-combustion-engine programmes while electric-vehicle orders remain in a lull phase.

How much Stellantis revenue does Sundram Fasteners expect this year?

Sundram Fasteners expects Rs 150 crore to Rs 175 crore of business from Stellantis this year, versus about Rs 50 crore last year. Management provided the range in response to a question on its United States electric-vehicle outlook, indicating a year-on-year rise of roughly three to three-and-a-half times in the Stellantis programme.

The range is a near-term management expectation, not evidence that pure electric-vehicle demand has recovered. Management said electric-vehicle orders remain in a lull phase, while the Stellantis contract also contains plug-in hybrid and internal-combustion-engine, or ICE, programmes that have begun billing.

At the lower end of the range, the increase from last year is about Rs 100 crore, rising to about Rs 125 crore at the upper end. The comparison separates current billing in hybrid and ICE programmes from the unresolved timing of demand recovery for the fully electric portion of the contract.

What is driving Sundram Fasteners' Stellantis billing ramp?

Sundram Fasteners said billing has started for plug-in hybrid and ICE products under its Stellantis contract, and management described this activity as a positive sign. These programmes are the disclosed mechanism supporting the Rs 150 crore to Rs 175 crore expectation while electric-vehicle orders remain subdued.

Management did not disclose product-level revenue, volumes or the respective contribution of plug-in hybrid, ICE and electric-vehicle work to the Rs 150 crore to Rs 175 crore range. It did say Sundram Fasteners is working with other customers to propel the investment it has made, rather than positioning that investment solely around current Stellantis billing.

The distinction between active billing and the electric-vehicle lull is central to the outlook. Management did not state that the whole Stellantis programme had reached mature production; instead, it identified plug-in hybrid and ICE activity as the parts currently generating billing.

When will Sundram Fasteners have clarity on peak volumes?

Sundram Fasteners expects to have a clearer picture of peak volumes by the second half of next year, according to management. This is the timetable offered alongside the Rs 150 crore to Rs 175 crore current-year Stellantis expectation, making it a management view rather than a reported production outcome.

The company did not provide a revenue target for the second half of next year, a peak-volume number or a date for a recovery in the electric-vehicle portion of the programme. The disclosed milestone is clarity on volumes, not a confirmed start date for full electric-vehicle demand recovery.

This sequencing makes the current-year revenue ramp and the longer-term volume question separate developments. Plug-in hybrid and ICE billing supports the current Rs 150 crore to Rs 175 crore outlook, while the second-half-of-next-year marker concerns the wider contract's eventual production scale.

How does the Stellantis ramp fit Sundram Fasteners' wider business?

Sundram Fasteners said exports recovered to almost 30% of total revenue from around 25% last year, after being about one-third of revenue around two years earlier. Management said export products have earnings before interest, taxes, depreciation and amortisation, or EBITDA, margins above 20%, and that a return towards a one-third export mix would support margin expansion.

Management also said half-yearly performance was Rs 311 crore compared with Rs 278 crore in the prior period. It attributed the reported margin effect partly to raw-material prices and said its internal assessment indicated EBITDA was about 1.5 percentage points above the reported figure after excluding the raw-material effect.

Domestic growth is being propelled by passenger cars, medium- and-heavy-commercial vehicles, and wind-energy investments, management said. The third phase of wind investment is intended to take annual wind-energy revenue above Rs 500 crore, with Rs 70 crore to Rs 80 crore of investment under execution.

In aerospace, Sundram Fasteners said revenue was Rs 50 crore last year and is expected to exceed Rs 100 crore this year. Management has identified Rs 30 crore to Rs 40 crore of investment in testing and other equipment to support aerospace revenue of Rs 200 crore in coming years.

What operating conditions could affect Sundram Fasteners' revenue ramp?

Sundram Fasteners said original-equipment manufacturers generally provide one month of firm schedules and two months of indicative schedules. Management said buoyancy continued across domestic and export segments, with continuing schedules available and turnover expected to be sustained at the current level alongside prospective growth.

Working capital has risen with export activity because export cycles can extend to nine months, management said. Inventories and receivables increased with activity, while goods and services tax input credit accumulated through raw-material procurement at elevated prices, capital expenditure and subcontracting operations.

Management said Sundram Fasteners has sufficient banking limits and expects borrowings to moderate as cash flows return to normal levels. It explained that higher export activity lengthens the cash cycle, unlike the earlier period when lower exports resulted in a shorter cycle.

Raw-material pass-through remains another variable for the original-equipment business. Management said most customer arrangements recover price changes immediately, while some have moved to a one-month lag from a three-month lag, and it said the main raw-material cost impact was already in the profit and loss account unless prices rise further.

Conclusion

Sundram Fasteners' disclosed Stellantis outlook depends on live plug-in hybrid and ICE billing rather than an immediate end to the electric-vehicle lull. The expected move from about Rs 50 crore last year to Rs 150 crore to Rs 175 crore this year would make the customer programme a larger contributor alongside recovering exports, wind energy and aerospace expansion.

The next point to watch is management's planned clearer view of peak volumes by the second half of next year. Investors can also track whether hybrid and ICE billing progresses at the pace required for the Rs 150 crore to Rs 175 crore range, and whether electric-vehicle orders move beyond the lull phase described on the call.