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Dolat Capital Report
Sterling Tools Ltd.'s revenue grew 16.4 % QoQ and stood at Rs 2.07 billion led by higher revenue from electric vehicles business (up 149% QoQ). Ebitda grew 12.2 % QoQ to Rs 281 million while margin contracted 50 bps QoQ at 13.5 % attributed to weaker mix (higher revenue from EVs business).
Demand momentum is strong and company is confident to see potent growth (20- 30%) going ahead on back of increasing content per vehicle, overall robust industry demand and increasing SOBs.
EV business has increased substantially in Q3 (149% QoQ), revenue stood at Rs 1.19 billion in nine months-FY23 versus 70 million in 9MFY22. The business is less capex intensive and hence the return on capital employed is expected to be higher than typical manufacturing business.
Sterling Tool is planning to add more components in the EV supply chain beyond motor control units. The segment wise mix stood at 98% from two-wheeler, 1% from three-wheeler and light commercial vehicles.
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