Management Attendees

  • Mr. Atul Aggarwal - Managing Director
  • Mr. Jaideep Wadhwa - Non-Executive Non-Independent Director
  • Mr. Anish Agarwal - Whole-Time Director
  • Mr. Amit Dhadda - Chief Financial Officer
  • SGA - Investor Relations Advisors

Key Financial Performance (Standalone)

Q2 FY27 Performance:

  • Revenue increased by approximately 32% year-on-year to achieve the highest-ever quarterly revenue.
  • EBITDA increased by 8% year-on-year to ₹27.7 crores.
  • Profit After Tax (PAT) stood at ₹13.6 crores, compared to ₹19.8 crores in Q2 FY26. The prior period included an exceptional gain of ₹9.5 crores.

H1 FY27 Performance:

  • Revenue grew by approximately 28% year-on-year to achieve the highest-ever half-yearly revenue.
  • EBITDA increased by 17% year-on-year to ₹58.7 crores, the highest-ever half-yearly EBITDA.
  • PAT stood at ₹30.0 crores, compared to ₹30.8 crores in H1 FY26 (which included the ₹9.5 crore exceptional gain).

Operational and Strategic Highlights

Industry Context & Market Share: The Indian automobile industry grew ~18% YoY in Q2. Sterling Tools' growth of 32% signifies significant market share gains, driven by strong traction in the Commercial Vehicle (CV) segment with marquee customers like Tata, Leyland, Volvo, Mahindra, and Daimler Benz.

Profitability Pressure & Cost Recovery: Margins were pressured due to the exhaustion of low-cost inventory from Q1 and significant input cost inflation. Some commodity costs (e.g., Tungsten Carbide) rose by up to 300%, while others saw 30-50% increases. The company is actively negotiating price pass-throughs with OEM customers, which typically occur with a time lag. These recoveries are expected to improve margins in Q3 and Q4, some with retrospective effect.

Capex and Capacity Expansion:

  • The consolidated Capex plan for FY27 has been increased to ₹150 crores from an earlier plan.
  • The fasteners business Capex has been raised to ~₹120 crores (from ₹80 crores), of which ₹25 crores has already been incurred. This investment is expected to add ~₹150 crores in revenue capacity.
  • Subsidiary Capex: ₹20 crores is allocated to Sterling E-Mobility (SEM) and ~₹10 crores to Sterling Tech-Mobility (STML).

Subsidiary Performance - Sterling E-Mobility (SEM):

  • Q2 FY27 Revenue: ~₹23 crores
  • H1 FY27 Revenue: ~₹37 crores
  • Growth: Volume growth was 26% QoQ, but value growth was ~80% QoQ due to a product mix shift from lower-value 2/3-wheelers to higher-value Commercial Vehicles.
  • Progress: Production lines for onboard chargers and multifunction units were commissioned in Q2 as planned. The business has 42 active programs and 23 business contracts, with 5 new contracts secured in H1.
  • Outlook: Breakeven is targeted at an annual revenue run rate of ₹150 crores, which is expected to be achieved in FY28. Significant revenue ramp-up from new programs is anticipated in Q4 FY27.

Subsidiary Performance - Sterling Tech-Mobility (STML):

  • The high-voltage DC contactors and relays business commenced commercial supplies in Q2 FY27 as planned.
  • Gross margins are already in line with projections for when the business ramps up.

Advanced Electric Motor (AEM) Update: One proof-of-concept (PoC) is delayed but expected by end-November 2026. A second PoC has been put on hold by the customer due to inflationary pressures affecting their advanced engineering projects.

Financial Position & Debt: Debt levels increased in Q2 due to three primary factors: 1) A ₹40 crore investment in subsidiaries (SEM & STML); 2) Funding for the elevated capex plan; 3) Higher working capital requirements driven by a 30% revenue growth and a strategic decision to carry more raw material inventory due to buoyant market conditions and fully booked steel mills.

Competition & Strategy: The acquisition of a key competitor by an Italian company has not resulted in any pricing or volume pressure. The company attributes its strong position to quality, service, capacity, and decades-long customer relationships. The strategy remains focused on automotive and adjacent segments, with no plans to enter structural or construction fasteners. Incremental growth is pursued through new product development and increasing share of wallet with existing customers.

Management Commentary

Management expressed confidence in maintaining growth momentum, underpinned by customer commitments and capex investments. Near-term EBITDA margins are expected to remain under pressure in FY27 due to exceptional input cost inflation but are projected to improve sequentially, with a return to ~15% levels targeted by Q4 FY27. The long-term aspiration is to achieve ₹1,000 crores in revenue in the fasteners business.

Introduction of New CFO

Mr. Amit Dhadda was introduced as the newly appointed CFO. He brings nearly three decades of experience from organizations including Spark Minda, One97 Communications (Paytm), and over 14 years with Price Waterhouse.