Sterling tools -
Company overview and FY 24 result analysis -
India’s second largest manufacturer of Fasteners for
Auto OEMs. Makes fasteners for Chasis, Engine and other Standard applications. Company ( through its fully owned subsidiary - Sterling GTAKE mobility ltd ) manufactures and sells Motor Control Units ( MCUs ) for EVs in India
Company’s mkt share of MCUs in 2 wheeler EVs @ 30 pc
Manufacturing facilities - 04 for fasteners and 01 for MCUs
Q4 FY 24 results -
Revenues - 269 vs 212 cr
EBITDA - 31 vs 22 cr ( margins @ 11 vs 11 pc )
PAT - 16 vs 8 cr
Full FY 24 results -
Revenues - 932 vs 772 cr
EBITDA - 108 vs 98 cr ( margins @ 12 vs 13 pc )
PAT - 55 vs 48 cr
FY 24 Revenues breakup -
Fasteners segment - 608 cr
MCU segment - 323 cr
Company has announced setting up of Greenfield capacity in India to make magnetic and electronic auto components in a JV with Yangin Electronics. Yangin is a major supplier to Kia and Hyundai Motor companies. Aim to generate a 200 cr/ yr kind of business from this initiative ( inside next 5 yrs ). A partnership with Yangin is expected to help company have firm visibility on orders from the Korean OEMs in India. Beyond the Korean OEMs, company will also target the Indian OEMs for these Electro-Magnetic components
EBITDA margins for Fasteners segment @ 14 pc and 7 pc for MCU segment for FY 24
MCU segment is expected to keep expanding margins gradually and reach the targeted 10-12 pc margins in 2-3 yrs
MCU capacity now @ 6 lakh units / yr. Company sold aprox 4 lakh units in FY 24
Revenue potential from fasteners segment is 750-800 cr / yr without any further CAPEX
Subdued performance in fasteners business in FY 24 is due to 17 pc de-growth in the business from Farm-Equipment / tractors business. Other segments like - Cars, 2-Wheelers grew steadily
An avg MCU costs aprox 8-12 pc of the cost of a two wheeler - depending on model to model
Company is the single source supplier of MCUs for all the 2-wheeler models that the company is supplying to ( this is a big deal - IMO )
Aiming to grow by 30 pc in the MCU segment in FY 25 ( Apr month sales were however subdued due ending of FAME-II subsidy scheme for EVs on 31 Mar 24. Expect a reversal going fwd )
Have lined up a capex of 60 cr for the fasteners and MCU businesses in FY 25. Plus there will be additional capex on the new JV ( amount not yet finalised )
Disc: bought a tracking position recently, biased, not SEBI registered
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