Shares of Sundaram-Clayton (SCL) climbed 15% in Friday’s intraday trading to hit an all-time high of ₹2,209.95 on the BSE, a meteoric rise following a 23% jump in mere two days, driven by a stellar growth outlook.
As a leader in aluminum die casting, SCL is ready to seize the wave of light-weighting sweeping the automotive industry.
Known for its prowess in handling low-volume, high-variety complex parts, SCL caters to both commercial and passenger vehicle markets, driven by growing demand in India, the US, and the EU markets poised for strong growth.
Adding to its momentum, SCL is positioned to benefit from the anticipated shift of automotive part suppliers from China, which could open up new avenues of growth.
In a recent strategic initiative, the company commenced commercial production at its newest facility in Tamil Nadu. In its initial phase, the facility has an annual production capacity of 7,750 MT of Aluminum Die Castings.
This expansion underlines the strategic blueprint laid out in SCL’s FY24 annual report, which reflects the complexities of a thriving domestic market as well as a challenging export environment in FY2024-25.
India’s production-linked incentives (PLI) for the automotive and component sector and initiatives aimed at boosting semiconductor manufacturing, a key enabler for the sector’s future, buoy the medium-term outlook.
Estimates for FY25 suggest that the Indian market may see passenger vehicle sales grow by about 6%, MHCV sales by about 11% and two-wheeler sales by about 10%. In contrast, the export scenario looks stormy, with the US and EU truck industries set to decline.
In the long term, the industry faces a number of challenges, ranging from stricter emissions regulations and fuel economy standards to the rapid adoption of alternative drivetrain technologies.
The US and EU markets are already witnessing a turning point as global truck makers introduce zero-emission vehicles, marking the beginning of a transformational shift that SCL and its peers must embrace with agility.
Amid this evolving backdrop, SCL’s strategic agility and leadership in aluminium die casting can be crucial in charting a path through the complexities of the rapidly changing automotive landscape, positioning the company not just as a partner but as a key architect of the industry’s evolution.
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