Sterling Tools hosted a conference call on Aug 3, 2023. In the conference call the company was represented by Mr. Atul Aggarwal- Whole Time Director,  Mr. Jaideep Wadhwa - Director and Mr. Pankaj Gupta- Chief  Financial Officer.

Key takeaways of the call

During June 2023 quarter, EV component segment witnessed 135% YoY growth to Rs 74 crore compared to industry growth of 77%.

In fasteners space, company grew 7% YoY in Q1 FY24. Volume growth was 5% YoY. Management indicated that steel prices have been stabilized.

In Q1 FY24, Overall auto-industry growth has been tepid and segments like CV and tractors have witnessed de-growth.

The Company is focused on building a healthy mix of premium priced value-added products with healthy margins at portfolio level.

Company is continuously taking cost saving initiatives to improve margins.

Management indicated that company’s order book remains healthy.

In terms of margins, company expects to clock 8-10% EBITDA margin in EV business.

In Q1 FY24, PV contributed 27% of total sales, two-wheeler 21%, CV 24%, farm Equipment & off Road 15%, Retail 10%, exports 2% and others 2%.

In terms of channel-wise mix, OEMs contributed 86% to total sales in Q1 FY24, exports 2%, replacement 10% and others 2%.

In Q1 FY24, two-wheelers contributed 98% to total sales of EV segment and others contributed 3%.

Management expects LCV segment volume to increase from Q3 FY24.

Company is expanding its MCUs capacity to 600,000 units. Construction is underway for the same.

Company is focused on localization of its products. Currently company’s import content is between 50-60%.

Management commentary: Mr. Atul Aggarwal, Whole Time Director of Sterling Tools stated: "We are pleased to share that the overall growth has been on a positive trajectory, with a topline growth of 27.6% and PAT growth of 36.4% on a YoY basis. Overall auto-industry growth has been tepid and segments like CV and tractors have witnessed de-growth. However, we have reported a revenue growth of 7.4% YoY in our fasteners business. The EV industry witnessed a growth of 77% during the quarter gone by whereas we have reported a staggering growth of 135% in our EV component segment on a YoY basis. Our EV business is expanding rapidly and revenue has nearly doubled in Q1FY24 over the corresponding quarter last year. We remain optimistic about our plans for FY24 both for fasteners and EV component business.”