Sterling Tools keeps a 14.34% margin as FY27 capex plan rises
Management flagged more visible steel-cost pressure but said its pass-through mechanism should mitigate the impact.
Filed 05 Aug 2026, 14:14 IST · STERTOOLS (STERTOOLS)
Key takeaways
- Standalone Q1FY27 operating margin was 14.34%, supporting net profit of Rs 16.4 cr on revenue of Rs 199.4 cr.
- Management raised planned FY27 capital expenditure to nearly Rs 80 cr, with OBC and multifunctional power-electronics lines scheduled for Q2FY27 commissioning.
- Other income of Rs 2.45 cr and a 25.31% tax rate formed part of the bridge from Rs 21.96 cr profit before tax to Rs 16.4 cr net profit.
A 14.34% margin in the standalone quarter
Sterling Tools reported standalone revenue of Rs 199.4 cr and operating profit of Rs 28.6 cr in Q1FY27, translating to a 14.34% operating margin. After Rs 1.3 cr of interest and Rs 7.79 cr of depreciation, profit before tax stood at Rs 21.96 cr. Other income contributed Rs 2.45 cr, while tax of Rs 5.56 cr left net profit at Rs 16.4 cr, with EPS of Rs 4.51.
Steel inflation is the main cost issue flagged
The company said inflationary pressure, particularly from higher steel prices, is expected to become more visible in coming quarters. Management said the existing pass-through mechanism is expected to mitigate the effect. The quarter's 14.34% operating margin is therefore the base to monitor as input-cost pressure becomes more visible.
FY27 investment is being directed to new power-electronics capacity
Management said it raised planned FY27 capital expenditure to nearly Rs 80 cr, above its earlier estimate. The company said OBC and multifunctional power-electronics production lines remain on track for commissioning in Q2FY27, while commercial production of HVDC contactors and relays is scheduled to begin in July or August 2026. It also said Sterling Energy and Mobility regularly supplies more than 20 customers, with trials or validation continuing for 33 customer programmes and additional business confirmed by four OEMs.
New products broaden the stated growth plan
Management said HVDC contactors and relays are expected to reach a double-digit margin profile at operational maturity. The company also said SEM is moving beyond traditional MCU offerings toward integrated 2-in-1, 3-in-1 and 4-in-1 power-electronics solutions. It told investors that additional North American revenue is being explored through its GLVAC outsourcing and export agreement.
Q1FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 |
|---|---|
| Revenue | ₹199 cr |
| Other income | ₹2 cr |
| Expenses | ₹171 cr |
| Operating profit | ₹29 cr |
| Operating margin (%) | 14.34% |
| Interest | ₹1 cr |
| Depreciation | ₹8 cr |
| Profit before tax | ₹22 cr |
| Tax | ₹6 cr |
| Net profit | ₹16 cr |
| EPS (₹) | ₹4.51 |
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- SEM regularly supplies more than 20 customers, with trials and validation ongoing for 33 customer programs.
Guidance & outlook
- The company expects a double-digit margin profile for HVDC contactors and relays at operational maturity.
- The company expects higher steel prices and inflationary pressure to become more visible in coming quarters.
- The company expects the impact of higher steel prices to be mitigated through its existing pass-through mechanism.
- The company expects additional North American revenue from its GLVAC outsourcing and export agreement.
Expansion
- The company increased planned FY27 capital expenditure to nearly INR 80 crore.
- The OBC and multifunctional power electronics production lines are on track for commissioning in Q2FY27.
- Commercial production of HVDC contactors and relays is scheduled to commence in July or August 2026.
New orders
- The company received additional business confirmation from four OEMs.
New initiatives
- SEM is transitioning toward integrated 2-in-1, 3-in-1 and 4-in-1 power electronics solutions.
- The company is investing in advanced manufacturing, including SMT and shop-floor automation.
Problems & risks
- The company faced continued inflationary pressures, particularly from higher steel prices.
- The company said higher steel prices and inflationary pressure would become more visible in coming quarters.
What to watch
- Whether standalone operating margin holds above 14.34% as steel-price pressure becomes more visible.
- Progress toward commissioning the OBC and multifunctional power-electronics lines in Q2FY27.
- Execution of the nearly Rs 80 cr FY27 capital-expenditure plan and the start of HVDC contactor and relay production.