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Sterling Tools Q1 Review - Recovery In Commercial Vehicle Volume To Propel Growth: Dolat Capital

Sterling Tools Q1 Review - Recovery In Commercial Vehicle Volume To Propel Growth: Dolat Capital

<div class="paragraphs"><p>Nuts and bolts sit in boxes as employees work on an engine part in the final assembly area at a production plant. (Photographer: Chris Ratcliffe/Bloomberg)</p></div>
Nuts and bolts sit in boxes as employees work on an engine part in the final assembly area at a production plant. (Photographer: Chris Ratcliffe/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

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.

Click on the attachment to read the full report:

Dolat Capital Sterling Tools Q1FY21 Result update.pdf

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