Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Sterling Tools Ltd (BOM:530759) achieved a milestone by crossing 1,000 crore in revenue for the first time in its history.
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The company's consolidated revenue increased by 10.6% to 1,038 crores, driven by strong growth in its subsidiary SMM.
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Margins improved due to higher sales volume for both fasteners and EV components, with a better product mix optimization.
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The company is net debt-free, maintaining a surplus cash position.
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Sterling Tools Ltd (BOM:530759) is focusing on operational efficiencies and innovation, positioning itself to outperform the broader industry.
Negative Points
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The standalone business experienced a decline in growth, with a 1% decrease in the last quarter.
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There were substantial one-time expenses for future product expansion, impacting financial performance.
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The company anticipates a down year in FY 526 due to the insourcing of a significant portion of volume by its biggest customer.
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Revenue from the subsidiary company was lower, affecting consolidated financials.
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The company faces challenges due to the dynamic and rapidly changing market conditions in the EV and hybrid vehicle segments.
Q & A Highlights
Q: Why did Sterling Tools' standalone business decline by 1% in the last quarter despite previous growth expectations? A: The decline was due to a slowdown in the auto industry, particularly in passenger and commercial vehicles, which did not perform well in the last quarter. Additionally, there were steep price reductions in steel, impacting revenue numbers. (Respondent: Unidentified_3)
Q: Can you provide insights into the recent partnership with Advanced Electric Machines and its revenue potential? A: While specific royalty details are confidential, the market for motors is expected to grow exponentially. Initially, market share expectations are in the single digits, but the technology is pioneering and expected to gain acceptance over time. (Respondent: Unidentified_5)
Q: How is Sterling Tools planning to diversify its customer base and product offerings in the EV segment? A: Sterling Tools is targeting a broader customer base, including three-wheelers and commercial vehicles. The company is working with over 30 customers and expects a significant shift in revenue contribution from non-two-wheeler segments. (Respondent: Unidentified_5)
Q: What is the expected contribution from new power electronics products in the next two years? A: The company is focusing on chargers and DC-DC converters, with a strategy to integrate into the power electronics space. Expected revenue from these initiatives is projected to be 10 crores this fiscal year and 30-35 crores in the next. (Respondent: Unidentified_5)