Sterling Tools soars after ICRA upgrades outlook to stable

Sterling Tools jumped 8.38% to Rs 206.35 after the ICRA reaffirmed the long-term as well as short term credit rating of the company while upgrading its outlook to stable from negative.

The company has total bank lines worth Rs 205.67 crore. The ratings on the company's term loans worth Rs 78.88 crore and long-term fund-based facilities (cash credit and packing credit) worth Rs 120 crore were reaffirmed at [ICRA] AA and outlook on these instruments was revised to stable from negative.

The ratings on the company's non-fund based limits worth Rs 2.09 crore and unallocated funds worth Rs 4.70 crore were reaffirmed at [ICRA] A1+.

ICRA said the revision in outlook of Sterling Tools factors in the stabilisation in its operating performance over the past few quarters, post the disruptions brought abought by the pandemic and nation-wide lockdown in Q1 FY2021. As the restrictions were lifted gradually over the course of the year, the company reported significant revival in revenues and profitability, even outpacing the industry growth, ICRA added.

The ratings continue to factor in Sterling Tools' established market position as the second largest automotive fastener manufacturer in India, trailing behind only Sundram Fasteners (in terms of revenues). The company also enjoys a healthy share of business.

Sterling Tools is engaged in the manufacturing as well as marketing of high tensile cold forged fasteners and is a reputed component supplier to Indian & Global automotive companies. The company caters to the leading manufacturers across all sectors of the auto industry in India.

On a consolidated basis, the company posted a net profit of Rs 3.13 crore in Q1 FY22 as compared to a net loss of Rs 9.22 crore in Q1 FY21. Net sales soared 340% to Rs 89.26 crore in Q1 FY22 over Q1 FY21.

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