Sterling Tools slows EV targets by a year after ₹21 cr bad debt charge
Standalone profit grew 50% from the core fastener business, but the company's EV pivot has hit a speed bump.
What's new with Sterling Tools Ltd.
- Standalone net profit grew 49.7% to ₹64.2 cr on ₹725.9 cr revenue.
- Non-fastener revenue targets pushed back by one year citing slow EV adoption.
- Management earmarked ₹75 cr for FY27 capex.
Why this matters for Sterling Tools Ltd.
The core fastener business holds a 15.3% EBITDA margin, but the EV transition is slower and costlier than planned. A ₹21 cr bad debt hit and a one-year target deferral show the friction in the company's diversification efforts.
What we're watching
- Whether partnerships for ARAS and onboard chargers generate revenue in FY27.
- The trajectory of fastener margins if the EV subsidiary continues to struggle.
- Any further write-downs at the STML subsidiary.
The full read
Sterling Tools finished the fiscal year with a 49.7% jump in standalone net profit to ₹64.2 crore on revenue of ₹725.9 crore. Fasteners remain the engine of the firm, posting a 15.3% EBITDA margin. During the earnings call, management conceded that EV adoption is slower than expected. They pushed back non-fastener revenue targets by a full year. The firm also booked a ₹21 crore bad debt charge at its subsidiary, Sterling Tech Mobility, reflecting the difficulty of its shift into new mobility tech. With ₹75 crore in capex planned for FY27, the company is still betting on tech partnerships for ARAS and onboard chargers. The company is trading its dependence on traditional fasteners for a new growth path, but that path currently requires cash while the market for these newer components remains sluggish.