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    Sterling Tools

    STERTOOLS
    Automobile and Auto Components·12 Nov 2025
    Management Summary

    Sterling Tools reported a Q2 FY26 total income of INR172.2 crores for its standalone fastener business, with the MCU division growing 22% Q-on-Q. While consolidated revenue saw degrowth due to a customer loss in SEML, the company maintains a net debt-free status and expects 5-7% growth in its standalone business for FY26. Significant capex of INR50 crores is planned for FY27 across existing businesses, with new high-voltage EV product lines like HVDC contactors showing strong future revenue potential.

    Highlights

    5

    • Standalone fastener business total income increased to INR172.2 crores in Q2 FY26.

    • MCU division reported 22% Q-on-Q growth, driven by diversification into 3-wheeler, LCV, and HCV segments.

    • H2 FY26 domestic sales for the industry are expected to see double-digit growth, lifting FY26 domestic sales by 5% to 7%.

    • Sterling Tech-Mobility (STML) HVDC contactors business has a revenue potential of INR200 crores within the next 5 years.

    • Company maintains a net debt-free status with consistent cash flow generation.

    Concerns

    3

    • PBT before exceptional items for the standalone fastener business remained flat on a year-on-year basis.

    • Consolidated level experienced degrowth over last year due to the loss of a key anchor customer in Sterling E-Mobility Solutions Limited (SEML).

    • EV business growth may be muted in the short term, with only INR2-3 crores revenue expected for SEM in FY26.

    Key financials

    Single quarter

    01 metrics
    1. 01Total Income (Standalone Fastener)₹172.2 Cr

    Segment breakdown

    MCU Division
    22% Q-on-Q Growth
    List

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    ₹50 crores

    Debt

    Debt disclosed

    Liquidity

    Liquidity disclosed

    Company maintains consistent cash flow generation and generates a lot of cash.

    Guidance & targets

    10
    CategoryTargetPriority
    Sales Growth
    Standalone Business FY26 Growth
    5% to 7%
    		High
    Revenue Potential
    HVDC Contactors Revenue Potential
    INR200 crores
    		High
    Revenue Target
    SEM Revenue
    INR450 crores
    		High
    Revenue Target
    SEM Revenue
    INR2 crores or INR3 crores
    		High
    Capex
    SEM Capex
    INR10 crores to INR15 crores
    		High
    Capex
    STML DC Contactor Capex
    INR10-odd crores
    		High
    Capex
    Standalone Fastener Business Capex
    INR25-odd crores
    		High
    Capex
    Total Capex for Existing Businesses
    INR50 crores
    		High
    Capex
    SEM Total Capex
    INR60 crores
    		High
    Consolidated Revenue
    Consolidated Revenue vs FY25
    very close to our numbers what we had in FY '25
    		Medium

    HVDC contactors commercial production

    Next quarter (Q3 FY26)
    CurrentStarting in December '25
    TargetCommercial operations

    Why it matters

    Marks the commencement of a new, high-potential business segment for Sterling Tech-Mobility.

    Our STML subsidiary will start commercial production of HVDC contactors and relays in December '25 at its state-of-the-art fully automated manufacturing facility in Bengaluru.

    How to verify

    detailed_narrative[title='Sterling Tech-Mobility (STML) - HVDC Contactors']

    Risks & concerns

    3
    RiskSeverity

    Impact of GST rationalization on EV value proposition

    GST rationalization made internal combustion engine scooters more economical, reducing the value proposition for electric scooters, requiring OEMs to rework their strategies. — Management acknowledged

    medium

    Loss of key anchor customer in SEML

    The loss of a key anchor customer in Sterling E-Mobility Solutions Limited (SEML) has led to consolidated degrowth over the last year. — Management acknowledged

    high

    Geopolitical risk and need for in-house technology

    The company aims to develop its own technology to protect against geopolitical risks and reduce dependence on partners. — Management acknowledged

    low

    Q&A highlights

    8

    “So that -- those customers today contribute more than 25% of our total revenue. And our 2-wheeler business is about 60% of our total revenue now. And the number will -- and we expect that going forward, the share of business from other segments, that's 3-wheeler, LCV, HCV will continue to grow.”

    Reveals the diversification strategy for the MCU business beyond 2-wheelers and the growing contribution from 3-wheeler, LCV, and HCV segments.

    asked by Deepan Sankara

    2 min read7 chapters

    Detailed Narrative

    01

    Industry Highlights & Outlook

    The Indian automobile industry saw steady improvement in Q2 FY26, supported by GST 2.0 rollout and early festive demand. While passenger vehicle sales were marginally lower year-on-year, September witnessed a strong rebound. H1 domestic 2-wheeler sales grew 1%, and exports were up 24% post GST rationalization. The industry expects double-digit growth in H2, projecting FY26 domestic sales to grow by 5% to 7%.

    02

    Standalone Fastener Business Performance

    Sterling Tools' standalone fastener business reported a total income of INR172.2 crores in Q2 FY26. EBITDA margin and PBT before exceptional item📎s remained flat on a year-on-year basis. The company expects its standalone business to grow at 5% to 7% for the full year FY26, maintaining its positive trajectory.

    03

    Sterling E-Mobility Solutions (SEM) Evolution

    Sterling Gtake Mobility Limited has been rebranded as Sterling E-Mobility Solutions Limited (SEM), reflecting its evolution as a comprehensive provider of advanced EV powertrain and power electronic solutions. This is strengthened by partnerships with Advanced Electric Machines and Landworld Technology Company Limited. SEM aims to reach INR450 crores by FY30, with INR2-3 crores expected in FY26.

    04

    Sterling Tech-Mobility (STML) - HVDC Contactors

    The STML subsidiary will commence commercial production of HVDC contactors and relays in December '25 at its Bengaluru facility. This business has a revenue potential of INR200 crores within the next 5 years. The Indian market for HVDC contactors and pre-charge relays is currently INR300-400 crores, projected to grow to INR1,000 crores by the end of the decade, with no current Indian manufacturers.

    05

    Strategic Partnerships & Technology Localization

    The company has formalized four technology partnerships, including Jiangsu Gtake, Advanced Electric Machines, and Landworld, to accelerate its entry into high-growth EV areas. These partnerships enable rapid market entry and cut the learning curve, while the company simultaneously invests in its own IP to achieve independence. Vertical integration, including SMT technologies, is being pursued to reduce costs and capture more value.

    06

    Capital Expenditure Plans

    For FY27, Sterling Tools plans a total capex of approximately INR50 crores for its existing businesses. This includes INR10-15 crores for SEM, INR10 crores for the STML DC contactor business, and INR25 crores for the standalone fastener business. The total 3-year capex for SEM (FY25-FY27) is projected at INR60 crores, with INR45 crores already invested in FY25-FY26.

    07

    Overall Business Outlook

    Despite a consolidated degrowth in FY26 due to the loss of a key anchor customer in SEML, the company is confident in its recovery. Management expects consolidated revenue in FY27 to be very close to FY25 levels, driven by new STML and SEM businesses, alongside growth in the fastener segment. The company maintains a net debt-free status and consistent cash flow generation, supporting its strategic diversification.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.