28-Oct-2026 17:57:45
STERLING TOOLS Q2 CONCALL: MANAGEMENT EXPECTS 15%+ FY27 STANDALONE REVENUE GROWTH, TARGETS ~15% FASTENER EBITDA MARGIN BY Q4, ₹150 CR FY27 CAPEX & SEM REVENUE ABOVE ₹150 CR IN FY28
• MANAGEMENT EXPRESSED CONFIDENCE IN ACHIEVING AT LEAST 15% STANDALONE REVENUE GROWTH IN FY27, SUPPORTED BY STRONG COMMERCIAL VEHICLE DEMAND, OEM MARKET-SHARE GAINS & CAPACITY EXPANSION • MANAGEMENT EXPECTS FASTENER EBITDA MARGINS TO RECOVER TOWARD APPROXIMATELY 15% BY Q4 FY27, SUBJECT TO CUSTOMER PRICE REVISIONS & STABILIZATION OF RAW MATERIAL COSTS • MANAGEMENT EXPECTS PROGRESSIVE RAW MATERIAL COST RECOVERIES DURING H2 FY27, WITH OEM PRICE NEGOTIATIONS & RETROSPECTIVE ADJUSTMENTS LIKELY TO SUPPORT Q3–Q4 PROFITABILITY • MANAGEMENT RAISES CONSOLIDATED FY27 CAPEX PLAN TO APPROXIMATELY ₹150 CR, INCLUDING AROUND ₹120 CR FOR FASTENER CAPACITY EXPANSION & REMAINING INVESTMENTS IN EV BUSINESSES • MANAGEMENT EXPECTS APPROXIMATELY ₹120 CR FASTENER CAPEX TO SUPPORT POTENTIAL INCREMENTAL ANNUAL REVENUE CAPACITY OF ₹150 CR, WITH INVESTMENT-TO-REVENUE CONVERSION OVER 6–18 MONTHS • MANAGEMENT ASPIRES TO SCALE ITS CORE FASTENER BUSINESS TOWARD ₹1,000 CR REVENUE, SUPPORTED BY HIGHER OEM WALLET SHARE, ADDITIONAL PRODUCTS & NEW MANUFACTURING CAPACITY, WITHOUT A COMMITTED TIMELINE • MANAGEMENT EXPECTS STERLING EMOBILITY (SEM) ANNUAL REVENUE TO EXCEED ₹150 CR IN FY28, REPRESENTING ITS INDICATIVE OPERATING BREAKEVEN REVENUE THRESHOLD • MANAGEMENT EXPECTS MULTIPLE EV CUSTOMER PROGRAMS TO BEGIN COMMERCIAL SUPPLIES DURING Q3–Q4 FY27, WITH STRONGER REVENUE MOMENTUM ANTICIPATED IN FY28 • MANAGEMENT EXPECTS STERLING TECH MOBILITY (STML) DC CONTACTOR & RELAY BUSINESS TO SCALE AS CUSTOMER VALIDATIONS CONVERT INTO REGULAR COMMERCIAL PRODUCTION • MANAGEMENT EXPECTS AN ADVANCED ELECTRIC MOTOR PROOF-OF-CONCEPT MILESTONE AROUND NOVEMBER 2026, ALTHOUGH COMMERCIAL REVENUE CONTRIBUTION REMAINS A LONGER-TERM OPPORTUNITY • Q2 STANDALONE REVENUE GREW APPROXIMATELY 32% YOY, SIGNIFICANTLY OUTPERFORMING AUTOMOBILE INDUSTRY GROWTH OF AROUND 18% • H1 FY27 STANDALONE REVENUE INCREASED APPROXIMATELY 28% YOY, SUPPORTED BY STRONG FASTENER DEMAND & HIGHER COMMERCIAL VEHICLE PRODUCTION • Q2 STANDALONE EBITDA GREW APPROXIMATELY 8% YOY TO ₹27.7 CR, WHILE H1 EBITDA INCREASED 17% TO ₹58.7 CR, REFLECTING REVENUE GROWTH OFFSET BY INPUT-COST INFLATION • Q2 STANDALONE PAT DECLINED TO ₹13.6 CR FROM ₹19.8 CR LAST YEAR, WHILE H1 PAT STOOD AT ₹30 CR VS ₹30.8 CR, WITH PRIOR-YEAR RESULTS BENEFITING FROM A ₹9.5 CR EXCEPTIONAL GAIN • FASTENER VOLUMES GREW APPROXIMATELY 28% DURING H1 FY27, SUPPORTED BY STRONG DEMAND FROM EXISTING OEM CUSTOMERS INCLUDING TATA, ASHOK LEYLAND, VOLVO, MAHINDRA & DAIMLER-BENZ • MANAGEMENT INDICATED THAT FASTENER REVENUE GROWTH IS PRIMARILY DRIVEN BY HIGHER SHARE OF BUSINESS FROM EXISTING OEMS RATHER THAN ADDITION OF NEW MAJOR CUSTOMERS • STEEL, POWER, DIESEL, TOOLING & MANUFACTURING COST INFLATION PRESSURED EBITDA MARGINS, WITH TUNGSTEN CARBIDE PRICES INCREASING MORE THAN 300% OVER THE PREVIOUS 12 MONTHS • CORE FASTENER BUSINESS HAS HISTORICALLY DELIVERED APPROXIMATELY 15–16% EBITDA MARGINS, WITH MANAGEMENT FOCUSED ON RECOVERING PROFITABILITY THROUGH OEM PRICING ADJUSTMENTS • STERLING EMOBILITY REPORTED Q2 REVENUE OF APPROXIMATELY ₹23 CR & H1 REVENUE OF ₹37 CR, WITH Q2 REVENUE GROWING AROUND 80% SEQUENTIALLY • MANAGEMENT CLARIFIED THAT SEM'S 26% SEQUENTIAL GROWTH FIGURE REFERRED TO VOLUMES, WHILE REVENUE GREW APPROXIMATELY 80% QOQ • SEM COMMISSIONED NEW PRODUCTION LINES FOR ONBOARD CHARGERS & MULTI-FUNCTION UNITS DURING Q2, SUPPORTING EXPANSION INTO HIGHER-VALUE EV COMPONENTS • SEM IS EXPANDING ITS PRODUCT PORTFOLIO ACROSS MOTOR CONTROL UNITS, ONBOARD CHARGERS, MULTI-FUNCTION UNITS & ELECTRIC COMMERCIAL VEHICLE SOLUTIONS • COMPANY HAS 42 ACTIVE E-MOBILITY PROGRAMS & 23 BUSINESS CONTRACTS, INCLUDING FIVE NEW CONTRACTS MENTIONED DURING H1 FY27 • MANAGEMENT EXPECTS NEW EV CONTRACTS TO PROGRESS TOWARD PRODUCTION BY FY27-END, WITH CUSTOMER APPROVALS & VALIDATIONS GRADUALLY CONVERTING INTO REGULAR SUPPLIES • STERLING TECH MOBILITY COMMENCED COMMERCIAL SUPPLIES OF HIGH-VOLTAGE DC CONTACTORS & RELAYS DURING Q2 FY27, MARKING ITS TRANSITION FROM PRODUCT DEVELOPMENT TO REVENUE GENERATION • MANAGEMENT INDICATED INITIAL STML GROSS MARGINS ARE BROADLY IN LINE WITH EXPECTATIONS, WHILE MEANINGFUL EBITDA CONTRIBUTION DEPENDS ON HIGHER PRODUCTION VOLUMES • CUSTOMER VALIDATION CYCLES FOR NEW EV PRODUCTS CAN TAKE APPROXIMATELY 12–18 MONTHS, MAKING COMMERCIALIZATION TIMING AN IMPORTANT FACTOR FOR FUTURE REVENUE GROWTH • MANAGEMENT ACKNOWLEDGED HIGHER BORROWINGS DUE TO CAPEX, APPROXIMATELY ₹40 CR INVESTMENT IN SUBSIDIARIES, WORKING CAPITAL REQUIREMENTS & STRATEGIC RAW MATERIAL INVENTORY BUILDUP • MANAGEMENT EXPECTS STRONGER COMMERCIAL VEHICLE DEMAND & HIGHER FASTENER CONTENT PER VEHICLE TO SUPPORT FUTURE BUSINESS GROWTH, SUBJECT TO AUTOMOTIVE INDUSTRY CONDITIONS • MANAGEMENT REMAINS POSITIVE ON FASTENER MARKET-SHARE GAINS, COMMERCIAL VEHICLE DEMAND, EV PRODUCT COMMERCIALIZATION & CAPACITY EXPANSION, BUT COMMODITY INFLATION, MARGIN PRESSURE, HIGHER DEBT & EV EXECUTION RISKS REMAIN KEY CONCERNS KEY MONITORABLE: Q4 FASTENER EBITDA MARGIN RECOVERY TOWARD 15%, FY27 STANDALONE REVENUE GROWTH OF AT LEAST 15%, SEM'S PROGRESS TOWARD ₹150 CR+ FY28 ANNUAL REVENUE, STML COMMERCIAL VOLUMES & IMPACT OF ₹150 CR CAPEX ON DEBT AND CASH FLOW. Note: The ₹1,000 Cr fastener revenue milestone is a strategic ambition without a committed timeline. The ₹150 Cr SEM revenue figure is an indicative annual breakeven threshold, not guaranteed profitability.
STERLING TOOLS LIMITED