Sterling Tools Ltd (STERTOOLS) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Your passcode has been confirmed. Please wait while you are joined to the conference. The conference is now being recorded.
Moderator: Ladies and gentlemen, this is your operator. I would like to make an announcement. There's a slight delay in this conference. We will begin this conference really shortly. In the meantime, please stay connected. Thank you.
Moderator: Ladies and gentlemen, thank you for patiently holding. The conference will begin shortly. Please stay connected, please do not disconnect. Thank you.
Moderator: Ladies and gentlemen, good day and welcome to Sterling Tools Limited Q2 H1 FY '27 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs and ex beliefs, opinion and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Aggarwal. Thank you and over to you, Mr. Aggarwal.
Atul Aggarwal (Sterling Tools Ltd): Thank you. Good morning, everybody. Thank you for joining us for the call this morning. Welcome to Sterling Tools Limited Q2 and H1 FY '27 earnings call. I am joined today by Mr. Jaideep Wadhwa, Mr. Anish Agarwal and our newly appointed CFO, Mr. Amit Dadda, and Strategic Growth Advisors, our investment investor relations advisors. Our present- our earnings presentation has been up uploaded on our website and the stock exchanges, and I hope everyone has had the opportunity to go through it. I would like to begin with industry overview. The Indian automobile industry recorded it recorded its highest-ever second quarter sales across major vehicle segments in Q2 FY '27. Domestic sales grew grew approximately 18% year-on-year to 83.88 lakh units, supported by improved affordability following GST 2.0, healthy rural and urban demand and vehicle replacement. According to SIAM, the industry is expected to maintain positive growth momentum in H2 FY '27, supported by festive demand, new launches, infrastructure spending and fleet replacement. However, inflation, potential interest rate increases, and geopolitical uncertainties remain important factors to watch. Turning to our performance, at a standalone level, we are pleased to report our highest-ever quarterly and half-yearly revenue along with our highest-ever half-yearly EBITDA. We have outperformed the broader automobile industry. While industry sales grew by approximately 18% in Q2 FY '27, our standalone revenue increased by around 32% year-on-year basis.
Atul Aggarwal (Sterling Tools Ltd): for HY27 against industry growth of approximately 20%, our stand-alone revenue grew by around 28%. A key driver has been strong traction in the CV segment, particularly higher volumes from a marquee customer. This reflects the benefits of our customer relationships and our continued efforts to diversify across vehicle segments. Our H1 EBITDA increased by 17% year-on-year to 58.7 crores, whereas for Q2 FY27, EBITDA increased to 27.7 crores, reflecting a growth around 8% YoY. Profit after tax stood at 13.6 crores in Q2 FY27 compared to 19.8 crores in Q2 FY26 and 30 crores in H1 '27 compared to 30.8 crore in the same period previous year. However, it is important to note that Q2 FY26 and H1 FY26 contained an exceptional gain of 9.5 crores. While revenue growth has been strong, profitability has faced near-term pressure. As discussed on our previous earnings calls, we exhausted most of our earlier low-cost inventory in Q1. At the same time, commodity and non-commodity input costs have increased significantly amid ongoing West Asia conflict. Our pricing arrangements with OEMs provide for pass-through of input cost increases. However, these recoveries typically come with a time lag, temporarily affecting margins. As the higher costs are progressively recovered, we expect margins to improve over the coming quarters subject to input price movements and broader operating environment. We remain focused on strengthening our core fastener businesses through customer diversification, capacity expansion, and disciplined investment. Against our earlier capex plan of 80 crores for fastener business, we have already incurred about 25 crores. and our total fastener capex plans can be in the range of about 110 crores now. We are also increasing our overall FY27 capex to about 150 crores across all our businesses of fasteners, DC contactors, and MCUs. Our fastener business continues to provide a strong foundation for the group, supported by the healthy demand, expanding customer relationships, and a continued focus on operational execution. Moving to SEM, Sterling E-Mobility Limited, revenue from this business stood at approximately 23 crore in FY27 in Q2 FY27 taking HY27 revenue to around 37 crores. This quarterly growth has primarily primarily come from higher volumes and new customer additions. The business has made encouraging progress, particularly in the commercial vehicle and light commercial vehicle segments. Our focus remains on higher-value applications and expanding our presence in commercial vehicles. The production lines for on-board chargers and multifunction units scheduled for commissioning in Q2 have been commissioned as planned. Our priorities remain increasing volumes, broadening the customer base, and strengthening the position in higher-value electric mobility solutions. At STML, Sterling Tech Mobility Limited, we have made steady progress in commercializing a high-voltage DC contactors and relays business. Commercial supplies, which were scheduled to begin in Q2 begin in Q2 FY27, have now commenced. This marks an important milestone as we as we move from development towards commercial execution. To conclude, our fastener business remains at the core of Sterling Tools' growth strategy. Long-standing customer relationships, opportunities across vehicle segments, customer diversification, and planned capacity investments position us to pursue the next phase of growth. While near-turn near-term input pressures, input cost pressures have affected profitability, we remain focused on execution, disciplined capital allocation, and strengthening our competitiveness across our businesses. Our priority is to build a more resilient business and deliver sustainable long-term value for our stakeholders. Before we move to the question-answer session, I would like to introduce our newly appointed CFO, Mr. Amit Dadda. Mr. Dadda brings nearly 3 decades
Atul Aggarwal (Sterling Tools Ltd): experience across finance, taxation, audit, corporate reporting, and financial control. He has He has held senior positions at organizations including Spark Minda, 197 Communications and spent over 14 years with Pricewaterhouse including national experience in the UK. His experience in manufacturing finance, regulatory compliance, fundraising and corporate governance will be valuable will be valuable as we continue to strengthen our financial and operational capabilities. We want We warmly welcome him to Sterling Tools, and now invite Amit if you to introduce himself.
Amit Dadda (Sterling Tools Ltd): Thank you, Atulji and good morning, everyone. I am delighted to join Sterling Tools Limited at its important stage in its growth journey. The company has built strong foundation in the fasteners business while steadily expanding into electric mobility and newer technology-led opportunities. At Sterling Tools, I look forward to working closely with the management team to strengthen the financial discipline, support business growth and maintain strong standards of governance and reporting. I look forward for interacting with all of you and contributing to the company's continuous progress, continued progress. Thank you. With that, we will be happy to take your questions.
Moderator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Dev who is an individual investor. Please go ahead.
Dev: Yeah. Hi. Thanks for the opportunity. Can you confirm the growth in the SEM and SGML business vis-a-vis Q1 of this year?
Atul Aggarwal (Sterling Tools Ltd): Hey, can you repeat that question? Can't hear you.
Dev: Can you confirm the growth in SEM and SGML business vis-a-vis the Q1 of this year?
128 more turns of this transcript: log in to Stocksigma to read the full call.