Sterling Tools Limited: Navigating Growth and Diversification in Q2 & H1 FY26

Sterling Tools Limited, a prominent player in India's automotive components sector, recently unveiled its financial performance for Q2 and H1 FY26, alongside an investor presentation and concall transcript that shed light on its strategic direction. While the consolidated results reflected a period of adjustment, the underlying narrative points to a company actively transforming and investing in high-growth segments, particularly electric vehicles (EVs).

For H1 FY26, Sterling Tools Limited reported a consolidated total income of INR 405.9 crore. This represented a degrowth compared to the previous year, primarily attributed to the loss of a key anchor customer within its Sterling E-Mobility Solutions Limited (SEML) subsidiary. Despite this, the standalone fastener business demonstrated remarkable resilience, contributing INR 335.4 crore to the total income and maintaining strong operational metrics. The company's EBITDA margin for the standalone business remained robust at 14.9% in Q2 FY26 and 14.9% in H1 FY26, showcasing its operational efficiency.

The revenue mix for H1 FY26 highlights the company's diversified customer base. In the standalone fastener segment, end-user splits saw Passenger Vehicles account for 26.44%, Two-Wheelers for 21.48%, Farm Equipment & Off Road for 12.39%, Commercial Vehicles for 12.39%, Three-Wheelers for 9.09%, and Exports (end-user segment) for 0.83%. The SEM segment, focusing on EV components, contributed 17.37% to the consolidated revenue, with its end-user split showing Two-Wheelers at 10.60%, Light & Heavy Commercial Vehicles at 4.34%, and Three-Wheelers at 1.91% of the total consolidated revenue. This granular breakdown underscores the company's broad market penetration across various automotive categories.

Strategic Diversification and Future Outlook

Sterling Tools Limited is not merely resting on its legacy fastener business; it is aggressively pursuing a strategic diversification into the burgeoning EV ecosystem. This pivot is primarily driven by its subsidiaries, Sterling E-Mobility Solutions Limited (SEM) and Sterling Tech-Mobility Limited (STML). SEM, formerly Sterling Gtake Mobility Limited, has evolved into a comprehensive provider of advanced EV powertrain and power electronic solutions. Its offerings now include Motor Control Units (MCUs), integrated motors, magnet-free motors, onboard and off-board chargers, and DC/DC converters. The company has significantly enhanced its MCU capacity to 600,000 units per annum, demonstrating its commitment to scaling EV component manufacturing.

STML represents another critical growth pillar, focusing on high-voltage components and relays. This subsidiary is set to commence commercial production of HVDC contactors and relays in December 2026 from its state-of-the-art, fully automated manufacturing facility in Bengaluru. This initiative positions STML as a first-mover in domestic manufacturing of high-voltage power transmission components for India's evolving electric mobility and industrial sectors. The management projects a revenue potential of INR 150-200 crore for this business within the next five years, emphasizing its strategic alignment with the