Sterling Tools rose 3.24% to Rs 185 after the company entered into a joint venture agreement with China's Jiangsu GTAKE Electric Co. to design, manufacture and supply motor control units in India.
The stock has traded in the range of Rs 184.80 and Rs 192 so far during the day. The trading volume for the scrip at 4259 shares, was 8.85 times its two week average trading volume of 481 shares.
The joint venture company will be a subsidiary of Sterling Tools and will commence production by Q1 of 2021. The agreement calls for the companies to manufacture motor control units (MCUs) domestically to cater to the Indian automotive market as well as to develop local design engineering, application support and after sales service capabilities as per the requirements of the Indian industry.
In the proposed joint venture company (JVC), STL will hold 51% stake while the remainder 44% stake will be held by GTAKE.
GTAKE is an R&D led organization and 40% of its workforce is engaged in the function. The company was incorporated in 2009 and has a dominant market share for MCUs in China. The company has developed several unique products that integrate additional powertrain functionality. GTAKE controllers optimize torque characteristics and efficiencies of electric motors over wide operating conditions. The announcement was made after market hours yesterday, 23 December 2019.
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Sterling Tools (STL) 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.
The company's consolidated net profit declined 53.9% to Rs 7.01 crore on a 36% fall in net sales to Rs 89.24 crore in Q2 September 2019 over Q2 September 2018.
The stock has fallen 47.55% in the past one year. It has recovered 9.89% from its one-month low of Rs 168.05 recorded on 26 November 2019.
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