Sterling Tools FY26: Fasteners stay strong as EV timelines stretch

Sterling Tools Limited closed FY26 with a familiar split in its story. The standalone fasteners business continued to grow and expand margins, while consolidated profitability weakened as the group’s newer EV-led verticals absorbed a slower-than-expected adoption curve in India.

On a standalone basis, total income for FY26 rose to INR 725.9 crore, up 11.4% year on year. EBITDA increased to INR 111.0 crore, up 17.1%, with EBITDA margin improving to 15.3% from 14.5%. Profit after tax rose to INR 64.2 crore.

The consolidated view was materially softer. FY26 total income declined to INR 839.5 crore from INR 1,038.0 crore in FY25. Adjusted EBITDA declined to INR 93.7 crore with margin at 11.2%, and PAT reduced to INR 29.3 crore with margin at 3.5%. Q4FY26 also highlighted the pressure, with consolidated adjusted EBITDA margin at 5.3% and PBT before exceptional items at INR minus 1.6 crore.

The core engine: fasteners execution and cash generation

Management attributed the standalone fasteners performance to operating leverage, favorable product mix, growing share of value-added products and operational efficiencies. The company also highlighted OEM relationship strengthening, including entry into the Tata Passenger Vehicle segment during FY26 and new business wins of INR 64 crore.

Revenue diversification within fasteners remained visible. For FY26, channel mix was disclosed as 88% OEM, 11% retail and 1% exports. End-user mix was disclosed as 31% passenger vehicles, 25% two-wheelers, 17% commercial vehicles, 14% farm equipment and off-road, 7% exports and 11% retail.

In the concall, management emphasized cash generation and balance sheet strength, stating cash flow from operations from the standalone fasteners business at INR 83.3 crore in FY26 and reiterating a net debt free position for the core business.

Financial snapshot

Note: Consolidated adjusted EBITDA for FY26 was INR 93.7 crore (11.2%) and excludes ESOP expenses.

EV and technology bets: capability building amid slower penetration

Management was explicit that EV penetration in India has progressed slower than earlier expectations, and stated that the broader EV opportunity timeline has shifted by nearly 3 to 5 years. This matters because Sterling’s multi-year strategy is built on using the cash generative fasteners franchise to fund a wider mobility and electrification portfolio.

Within Sterling E-Mobility, SEM is positioned as a powertrain and power electronics platform. The investor presentation highlighted 28 active customer programs and segment diversification across two-wheelers, three-wheelers, and LCV and HCV applications. It also described a broader product set spanning motor control units, integrated motor and controller solutions, on-board and off-board chargers, DC DC converters and rare-earth magnet-free motors.

A near-term operational milestone is commissioning and ramp-up. The company stated that the OBC and multi function lines will be commissioned in Q2 FY27. In the concall, management reiterated that OBC and DC DC production lines are expected to be commissioned by end of Q2 FY27, with supplies expected from Q3 FY27 onwards.

SEM revenue mix by end-user segment for FY26 was disclosed as 50% two-wheelers, 15% three-wheelers and 35% LCV and HCV.

STML and the push for import substitution in high-voltage components

Sterling Tech-Mobility’s HVDC contactors and relays initiative is positioned as a domestic manufacturing and import substitution play. The company stated that commercial production for serial orders is expected to commence in July or August 2026, with localization intended to enhance value addition and cost competitiveness.

In the concall, management also shared an estimate of the Indian market opportunity for HVDC contactors and pre-charge relays at around INR 300 crore, with expectations of growth to over INR 750 crore by the end of the decade, driven by electrification across vehicles, charging infrastructure and energy applications. This market sizing was presented as management commentary rather than a third-party forecast.

What to track next

The near-term focus points are execution and timelines. For the core fasteners business, management guided FY27 capex of around INR 75 crore, with commercialization expected by Q4 FY27. It also indicated current capacity supports around INR 800 crore plus of revenue, with capabilities being built toward INR 900 to INR 1,000 crore with ongoing and additional capex.

For SEM, management acknowledged FY27 is likely to remain loss-making, but stated it expects a return to profitability in FY28. For STML, the key milestone is commencement of serial production in July or August 2026.

At a consolidated level, Sterling Tools is balancing a strong, mature fasteners franchise with longer-gestation mobility technologies. FY26 reinforced that the cash engine is working. The question for FY27 and FY28 is whether new product commissioning and customer program conversions can narrow the gap between the standalone and consolidated performance.