1. At a Glance
Sterling Tools Ltd is having one of those quarters where the spreadsheet looks like it woke up on the wrong side of the bed. Market cap sits at ~₹890 Cr, stock is chilling around ₹246, down ~46% over one year, while the broader auto component pack pretends nothing is wrong. Q3 FY26 revenue came in at ₹206 Cr, down a brutal 21% YoY, and PAT nose-dived 66% to ₹1.56 Cr. Yes, you read that right — profits basically went into EV mode… silent.
The irony? This is a company trading at ~27x earnings with ROE of ~12%, ROCE ~14%, and a balance sheet that’s not exactly screaming Ferrari either. Debt is ~₹167 Cr, debt-to-equity ~0.32, and yet management is talking magnet-free motors, HVDC relays, and China-plus-one dreams. Fasteners are still the breadwinner (~63% sales), EV electronics the future (~37%), and the stock price is stuck somewhere between hope and disbelief.
So the big question: is this just a cyclical pothole on the highway to EV glory, or are investors funding a sci-fi sequel before the first movie recovered its budget?
2. Introduction
Sterling Tools is one of those classic Indian auto ancillary stories: founded in 1979, mastered cold-forged fasteners, supplied everyone from Maruti to Ashok Leyland, and built a respectable mid-cap reputation. For decades, bolts paid the bills, dividends showed up, and nobody complained.
Then EVs happened.
Suddenly, fasteners felt… boring. So Sterling did what any ambitious Indian promoter group does — pivoted. Enter SGEM (Sterling Gtake E-Mobility), MCUs, power electronics, HVDC contactors, magnet-free motors, tech licensing from the UK, partnerships with Chinese firms, and PowerPoint decks that scream “future ready”.
The problem? The present looks tired.
Q3 FY26 numbers show revenue contraction, margin pressure, tax shocks (64% tax rate in Dec 2025 quarter — accountant fainted), and PAT barely breathing. Meanwhile, the market is still pricing Sterling like it’s halfway to becoming the Bosch of EV components.
This article breaks down what Sterling actually does, how the numbers stack up, whether the valuation math makes sense, and if the EV bet is brilliance or Bollywood overacting.
3. Business Model – WTF Do They Even Do?
Think of Sterling as a two-headed creature:
Head
1: Fasteners (Old School, Pays the Bills)
Sterling Tools manufactures cold-forged, high-tensile fasteners: axle bolts, engine bolts, wheel bolts, standard and special fasteners. These go into passenger vehicles, CVs, 2Ws, tractors, construction equipment — basically anything with wheels and vibration.
Manufacturing footprint:
- 4 fastener plants: Faridabad, Ballabhgarh, Palwal, Bengaluru
- Clients: Maruti, Hero, Hyundai, Tata, Ashok Leyland, Volvo, Daimler, Cummins, JCB — the entire auto OEM WhatsApp group
Fasteners are boring, cyclical, margin-moderate, but predictable. This segment contributes ~63% of FY25 sales.
Head 2: EV & Power Electronics (Sexy, Burns Cash & Time)
Via SGEM and STML, Sterling has entered:
- Motor Control Units (MCUs)
- Contactors & relays
- HVDC components
- Power electronics
- Rare-earth magnet-free motors (licensed from UK’s AEM)
SGEM MCU capacity was ramped to 6 lakh units per annum in FY24. EV exposure is mostly 2W (~91%), with some 3W and CV flirtation.
They’ve signed:
- Tech licensing with Advanced Electric Machines (UK)
- Collaboration with Zhejiang Meishuo (China) for latching relays
- Partnership with Kunshan GLVAC for HVDC relays
- Ongoing JV talks with MotiveLink (erstwhile Yongin Electronics)
This side contributes ~37% of sales and ~100% of management excitement.
The business model today is essentially: use fastener cash flows to subsidise EV ambitions, while hoping scale shows up before patience runs out.
4. Financials Overview
Quarterly Comparison Table (₹ Cr, Consolidated)
| Metric | Latest Qtr (Dec 2025) | YoY Qtr (Dec 2024) | Prev Qtr (Sep 2025) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 205.85 | 260.88 | 207.91 | -21.1% | -1.0% |
| EBITDA | 22.55 | 26.82 | 23.61 | -15.9% | -4.5% |
| PAT | 1.56 | 13.60 | 17.19 | -66.0% | -90.9% |
| EPS (₹) | 0.43 | 3.78 | 4.75 | -88.6% | -90.9% |
Yes, PAT collapsed harder than
