STERTOOLS Q4 FY26 earnings call.
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Revenue
₹221.97 Cr
verified against source
Revenue YoY
11.4%
reported change
EBITDA
₹211 Cr
latest reported figure
Source
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What the record says.
Sterling Tools delivered a strong FY26 in its standalone fastener business with 11.4% revenue growth to ₹725.9 crore and EBITDA margin expansion of 80bps to 15.3%, driven by operational efficiencies and favorable product mix. The company secured ₹64 crore in new business acquisitions and entered Tata's passenger vehicle segment. However, near-term margin pressure looms as steel and energy costs surge—management expects Q1 FY27 to be an "adjustment quarter" before price hikes from OEMs in Q2. The EV components business (SEM) faces a 3-5 year timeline shift in EV penetration expectations, pushing break-even to FY28 from earlier targets. STML's HVDC contactors and relays business remains early-stage with commercial production from July-August 2026. With ₹75 crore capex planned for FY27 to expand fastener capacity toward ₹900-1,000 crore revenue potential, the company maintains its long-term positioning but acknowledges short-term pain in new EV ventures.
Colored figures show movement against the previous available record.
Guidance to track
- Capex will be deployed across capacity expansion, operational enhancements, and future growth programs. Commercialization expected by Q4 FY27 with asset turns of approximately 2x.
- Despite near-term Q1 FY27 margin pressure from commodity inflation, management maintains confidence in maintaining 15%+ EBITDA margins in the steady state.
- Current capacity supports ₹800 crore revenue; with FY27 capex and additional future investments, capabilities are being built to reach ₹900-1,000 crore.
- Onboard charger and DCDC converter production lines expected to be commissioned by end of Q2 FY27, with commercial supplies commencing from Q3 FY27.
Risks flagged
- Management explicitly acknowledged that EV penetration across segments has progressed slower than earlier industry expectations, pushing the broader EV opportunity timeline by nearly 3-5 years. This affects both SEM and STML revenue ramp-up schedules.
- Due to ongoing investments in capacity and technology, the EV components subsidiary SEM will not be profitable in FY27, though management expects return to profitability in FY28.
- Unusual surge in chemicals, plastics, and energy costs has created near-term margin pressure. While steel has pass-through arrangements with 1-2 month lag, other cost items lack standard mechanisms, requiring customer negotiations for compensation.
- The 50% non-auto revenue target and EV/non-EV business mix aspirations have been pushed back by about a year due to slower EV adoption, though management remains committed to long-term investments.
Key quotes
- This is an extreme scenario in the last 3-4 months. So there are no norms for that. It's since this is an extreme scenario we hope to mitigate that through a combination of price increase with the customer and improving internal efficiencies.
- We had setbacks in FY26 and we will possibly not be and we will not be profitable in FY27 but there is no reason for us not to be profitable in FY28. So yes, there is the penetration is lower than what we had anticipated.
- Our capital allocation for this new product lines is more strategic. When you are building capabilities, when you're diversifying and increasing new product lines, we'll have to go through a phase which is value destructive, margin dilutive, which is capital needs, building capabilities for technologies for products which are not currently available in India.
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