Auto component maker Sundram Fasteners Ltd (SFL) is stepping up diversification into wind energy, aerospace and railways even as exports to North America remain under pressure due to tariff headwinds, said Chief Financial Officer R. Dilip Kumar.
“The exports have moderated a bit as expected because of the tariff pressures. North America is in a bit of a strain, he said during an earnings call.
According to him, SFL expects gradual quarter-on-quarter improvement and at the same time it is working to de-risk its portfolio by expanding its presence in Europe.
SFL is in discussions with customers in Poland, Romania and Sweden, with several requests for quotations (RFQs) at various stages of closure. The company is also looking to deepen engagement in the UK market, where demand contraction on account of tariffs is expected to be limited.
“We have got a lot of enquiries from customers,” Kumar said, outlining a broad-based strategy to mitigate regional export risks.
Non-auto expansion gains pace
As part of its diversification strategy, SFL is accelerating growth in non-automotive segments. Revenue from wind energy has already scaled up from about ₹200 crore to ₹350 crore on an annualised basis in the first phase of expansion. The company now aims to take this to nearly ₹500 crore annually, implying around 30% growth from current levels.
The aerospace business, though small, is witnessing strong traction. Monthly revenues, which hovered around ₹2.5–3 crore, have nearly doubled to about ₹5 crore, translating into 50–60% growth. While aerospace revenues remain under ₹100 crore annually, management expects robust expansion on a low base in the coming quarters.
Opportunities are also emerging in railway fasteners through the dealer-distributor network, driven by increased investments in Vande Bharat trains and track modernisation. The tractor segment has delivered strong performance this year, while the aftermarket business continues to grow steadily.
Non-auto businesses — comprising aerospace, railways, wind energy, tractors and aftermarket — now account for around 38% of revenues, up from about 30%, partly due to a dip in export revenues. Wind energy and aerospace, in particular, have scaled up profitably, delivering healthy operational returns, the management said.
EV pipeline intact, ICE drives near-term growth
On the automotive front, Kumar said the recent traction largely came from the internal combustion engine (ICE) segment. While SFL has secured projects across electric vehicles (EV), plug-in hybrids (PHEV) and ICE platforms, current offtake is predominantly from ICE, with EV volumes expected to pick up in the second half of next year.
Segment-wise, exports account for about 25% of revenue, original equipment supplies contribute 60–62%, and aftermarket sales make up 12–13%. Within domestic sales, medium and heavy commercial vehicles, CVs and engines together account for about 35%, passenger cars and MUVs around 40%, and tractors 10–12%.
Capex to taper after FY26 peak
SFL expects to close FY26 with capital expenditure of around ₹350 crore. Capex is projected to moderate to about ₹250 crore in the following year, with investments beginning to contribute meaningfully to growth.
The company is targeting double-digit revenue growth, with business plans aligned to customer discussions and market feedback. While export headwinds persist in the near term, management remains optimistic that diversification across geographies and sectors will help cushion volatility and support sustained expansion.