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Small-cap stock engaged in the business of manufacturing and marketing high tensile cold forged fasteners, primarily for the automobile industry jumped 13 percent in the day’s trade upon signing Mou with Yongin Electronics Co., Ltd, a major supplier of components to Hyundai and Kia Motor Group 

With a market capitalization of Rs. 1,303 Crores, the shares of Sterling Tools Limited closed at Rs. 360.05, up 6.95 percent from its previous day’s close price of Rs. 360.05. 

Sterling Tools Limited has signed a Memorandum of Understanding (MoU) with South Korea’s, Yongin Electronics Co., Ltd, a major supplier of components to the automobile players like Hyundai and Kia Motor Group. This collaboration between Sterling and Yongin covers the entire portfolio of magnetic components required for various applications in India’s EV and electronics manufacturing growth. 

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This strategic agreement is expected to generate Rs. 250 Crores in business over the next 5 years, marking a crucial step in advancing the production of electric vehicles (EV) and electronic components within India. To accelerate the production capacity, Sterling Tools Limited will set up a new greenfield manufacturing facility in the country. 

The MoU enhances Sterling’s capability to provide solutions for EV & Hybrid space, as well as other automotive applications, incorporating the latest technology from Yongin, increases local value addition and backward integration into passive components in line with the ‘Atma Nirbhar Bharat’s vision of the Government of India. 

Yongin Electronics is the leading manufacturer of Electronic Components like Transformers, AC/DC Reactor, Coil & Choke, EMI Filter boards, DC Link EMI Filter, High Current DC Connector, and Metal Ferrite Cores and has participated in the development of Korea’s electronics industry over the past 47 years 

Sterling Tools Limited is engaged in the business of manufacturing and marketing high tensile cold forged fasteners, primarily for the automobile industry. It is the 2nd largest automotive fastener manufacturer in India and it is one of the largest Motor Control Unit (MCU) suppliers for electric vehicles in India. 

It has a strong customer base with well-known players like Mahindra, Honda, Tata, Suzuki, Hero, Volvo, Escorts, JCB, John Deere, Ashok Leyland, Daimler and many others. 

Its revenue from operations grew 11.85 percent from Rs. 208 Crores in Q3FY23 to Rs. 232 Crores in Q3FY24, accompanied by generating profits of Rs. 14 Crores in both quarters. 

It has reported a return on equity (ROE) of 11.8 percent and a return on capital employed (ROCE) of 13.3 percent, it is making decent returns on its equity and capital employed. 

Written by: Bharath K.S

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