Sterling Tools Q1 Review - Recovery In Commercial Vehicle Volume To Propel Growth: Dolat Capital
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Dolat Capital Report
Sterling Tools Ltd. reported decent operating performance in a tough quarter.
Net revenue de-grew 30% QoQ to Rs 890 million impacted by disruption in original equipment manufacturers production.
Ebitda margin suppressed by 238 basis points QoQ to 14.5% led by raw material inflation and negative operating leverage.
We expect margin pressure to ease out in ensuing quarter as raw material prices to pass on and benefit of operating leverage to kick in.
Given the long-term relationships with top OEMs, we expect Sterling Tools to emerge as the key beneficiary revival in automotive volume from Q2 onwards.
Moreover, reduction in Import volume and localisation push for fastener to propel growth.
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