Sterling Tools Limited (NSE: STERTOOLS) Q3 2025 Earnings Call dated Feb. 05, 2025
Corporate Participants:
Pankaj Gupta — Group Chief Financial Officer
Atul Aggarwal — Managing Director
Jaideep Wadhwa — Non-Executive Non-Independent Director
Unidentified Speaker
Analysts:
Ravi Gupta — Analyst
Chirag — Analyst
Unidentified Participant
Shristi Jain — Analyst
Manan Vandur — Analyst
Karthi Keyan — Analyst
Sanjaya Satapathy — Analyst
Dhiral — Analyst
Mukul — Analyst
Khush Nahar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Sterling Tools Limited Q3 and Nine Months FY ’25 Earnings Conference Call.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on the touchstone 4. I now hand the conference over to Mr Pankaj Gupta, Group CFO. Thank you, and over to you, sir.
Pankaj Gupta — Group Chief Financial Officer
Thank you. Good morning, everyone. On behalf of STL Group, we extend a very warm welcome to all of you for this quarter three, nine months FY ’25 earnings call. I’m joined today by Mr Atul Agarwal, our Managing Director; Mr, Director. We uploaded our presentation yesterday and hope you had a chance to look at the same. I request Mr Agarwal to — for his opening remarks.
Atul Aggarwal — Managing Director
Thank you, Pankat. Good morning, everybody. Welcome to our call for Q3 and nine months results for FY ’25. Let me start with a brief overview of the industry sorry.
During Q3 FY ’25, the overall automobile industry witnessed a tepid growth of 3.1% year-on-year against the corresponding period last year. Our standalone business grew 8.7% year-over-year-on-year, which indicates that we continue to outpace industry growth. India’s automotive industry is experiencing a transformative shift, driven by technological advancements, changing consumer preferences and a rising demand for hybrid and electric vehicles.
The electric two-wheeler industry grew by 37% in Q3 FY ’25 and on the back of sustained demand, coupled with OEMs launching some affordable options as well. The company registered a steady-state performance with a consolidated top-line revenue increasing by 24.5% year-on-year to INR832 crores in nine months of FY ’25. The top-line growth is mainly driven by performance, which has business — which has witnessed an uptick of 56% year-on-year growth to INR345.9 crores in nine months of FY ’25 against corresponding period last year.
The partners business also improved on the back of rising share of business with our existing customers, all along with our catering to new clients. We are excited to share that we have recently forayed into energy sector through a wholly-owned subsidiary, Serling Tech Mobility Limited. We have partnered with China’s Electric Company Technology — Technology Company Limited, where we locally manufacture latching relays, which are crucial in reducing power consumption and extending the lifespan of key components across smart metering systems as well as industrial and white goods applications.
These relays facilitate remote connection and disconnection of power to a consumer’s premises, utilizing a latch mechanism that minimizes energy consumption during operation. Initially, our production will focus on manufacturing latching relays for energy sector, industrial grids and other applications in India. This collaboration marks a major milestone in localizing the production of latching relays. As we expand beyond our automotive expertise, we are poised to meet India’s increasing demand for advanced technology in the energy sector.
By reducing dependence on imports, we aim to foster innovation and improve efficiency. This initiative aligns with our commitment to make an India vision and directly support our strategy to deliver cutting-edge solutions to our customers. This collaboration is projected to generate INR200 crores plus revenue in FY ’30 and Sterling tools will bring niche technology to manufacture and assemble latching relays locally at a new facility in Bangalore with an initial investment of around INR20 crores.
We have transitioned and straddled EV value chain from our legacy business to manufacturer of partners to entering new businesses such as partnership with for to manufacture MCUs for two-wheelers, three-wheelers, LCV and heavy commercial vehicle segments. MoU with while electronics to manufacture magnetic components by India’s EV and electronics manufacturing industry. Partnership with GLVSE to manufacture HPDC contractors and lea relays and then our recent announced, which I discussed, partnership with Electric to manufacture latching relays for energy sector, industry grids and other applications in India.
Happy to share that our new manufacturing facility in Bangalore for HPDC contactors and relays has made good progress. And we expect to commence production in Q2 FY ’26. Building on these developments, we remain focused on offering a comprehensive product portfolio and expanding our presence beyond the automotive sector. By leveraging our core strengths, we aim to capture incremental market-share. Moving forward, we will continue exploring new growth opportunities and delivering sustainable performance through both organic expansion and strategic initiatives.
Let me request Pankaj to give brief insight on the financial performance. Thank you.
Pankaj Gupta — Group Chief Financial Officer
Thank you, sir. I’ll now give the financial highlights for quarter three and nine months FY ’25, starting with standalone financial highlights for quarter three, total income grew 8.7% year-over-year to INR155 crores in-quarter three FY ’25 against INR143 crores in same quarter last year. EBITDA for the quarter stood at INR20.5 crores with EBITDA margin of 13.2% in-quarter three FY ’25. Profit-after-tax stood at INR8.3 crores in-quarter three. Nine months performance of standalone, total income grew by 8.9% at INR486 crores in nine months against for INR46 crores in FY ’24.
EBITDA increased by 7.6% year-over-year to INR69.9 crores in nine months as compared to INR64.9 crores in nine months FY ’24. EBITDA margin stood at 14.4% in nine months FY ’25. Profit-after-tax witnessed a growth of 18% year-over-year, reaching to INR31.6 crore in nine months as compared to INR26.8 crores in nine months FY ’24. Profit-after-tax margin stood at 6.5% in nine months FY ’25.
Coming to the consolidated financials for quarter three FY ’25, total income grew by 12.3%, reaching to INR263 crores in-quarter three FY ’25 as compared to INR234 crores last year. Adjusted EBITDA, which is before ESOP for the quarter increased by 13% year-over-year, reaching to INR32 crores with a margin of 12.1% in-quarter three FY ’25. Profit-after-tax stood at INR13.6 crore in-quarter three. Consolidated performance for YTD nine months FY ’25, total income grew by 24.5%, reaching INR232.3 crores in nine months.
The growth is attributed to STM performance as Mr said. Adjusted EBITDA increased by 25.8% year-over-year, reaching to INR105.6 crores compared to INR84.2 crores in nine months FY ’24. Adjusted EBITDA margin stood at 12.7% as consolidated for nine months. Profit-after-tax witnessed a growth of 26.5% year-over-year, reaching to INR49.5 crores in nine months FY ’25 compared to INR39.1 crores in nine months FY ’24. Profit-after-tax margin stood at 5.9% in nine months FY ’25.
Thank you, everyone. We can now begin with question-and-answer session, please.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Ravi Gupta from Incred Equities. Please go-ahead.
Ravi Gupta
Thanks for the opportunity. As Ola has demonstrated its mid motor instead of putting hub motors in their new third-generation scooters are we supplying them.
Operator
Sorry to interrupt you, sir. We cannot hear you clearly.
Ravi Gupta
Okay. And now it’s clear.
Operator
Yes, please go-ahead.
Ravi Gupta
Yeah. So Ola has demonstrated its new Gen 3 scooters in which they have put mid-drive motor instead of putting — instead of their previous motors like hub motors. Are we supplying to them for that?
Jaideep Wadhwa
So as of now, the Gen 3 models have been announced, but they are not in-production yet. We do not — the Gen 3 model has an integrated controller. So Ola will continue with a mix of Gen 2 models and Gen 3 models into the foreseeable future.
Ravi Gupta
Yeah. Sir, can you also explain how the container vehicle changes and what are the technologies applications are needed? And also if you can share and yeah, what are the components also which is going to be there?
Jaideep Wadhwa
That’s a very broad question. I’m not sure we can address this in this forum, but very quickly, what I Will say is that you know that electric — electric vehicles are seeing greater consolidation of individual components. Now this trend is help can take different paths but OEs are finding that by integrating multiple control or multiple components into one into one unit that they are able to save cost, they are able to make packaging or vehicle architecture much easier and therefore, it’s a trend going-forward. And this can happen there’s — you talk about motors and controllers getting integrated, there’s — and there are other people who are looking at integrating chargers and DCDCs and so on and so forth. So that’s a trend that’s happening in the industry. But this is a trend that will take several years to actually play-out. It’s because already companies have locked-in programs for, you know, for the next couple of years. So as these new — so it’s the programs that are going to come in FY ’28, FY ’29 that will have more integration. And that — and that is why — and I’ll also say that it’s difficult to predict exactly how this will map out because there are downsides also because as the more integration you have, if you do have a failure, that means then you basically you’re replacing the entire vehicle. So we’ll have to wait-and-watch it as to how this will happen. But the fact that there will be integration, I think is undeniable. And that’s why Sterling GTEK strategy has been to look at building powertrain competencies so that we are able to serve our customer requirements with integrated products across you know, whether it’s integrations with motors or it’s integration with chargers and other areas, we are able to — we are able to meet those requirements from our customers.
Ravi Gupta
Thanks for the detailed answer. Can you also put some color on the content per vehicle as well for the mid.
Jaideep Wadhwa
I’m sorry., then you have to speak slightly louder. Your audio is very.
Ravi Gupta
Short. Okay. Can you put some color on container vehicle as well, please?
Jaideep Wadhwa
So look, I mean currently what we are supplying, I can tell you what we are supplying today, we are lowest-cost MCU would be about INR3,500, INR4,000 rupees and our most expensive motor control unit would be more than INR4 lakh rupees. So going from low-speed scooter to heavy commercial vehicles, we span the entire the entire spectrum.
In terms of the percentage of the bomb we are anywhere between, I’ll say between 3% and 10% depending on — I mean if the vehicle is — if you’re talking about a truck or a bus, obviously, the cost is that much more. So even INR3.5 lakh rupees may not be as high a percentage, whereas in a scooter eight to 10,000 rupees is 10% of the bomb. So varies a lot on depending on what vehicle we are talking about.
Ravi Gupta
Thanks, thanks it. That’s it from my side.
Operator
Thank you. Thank you. The next question is from the line of Chirag from Whitevine Investment Management. Please go-ahead.
Chirag
Yes, sir. Thanks for the opportunity. Sir, just a clarification on the earlier participants question. So in an in say something like Ola Gen 3, which is integrated, do you — will you be supplying components, if not the entire MCU?
Jaideep Wadhwa
So we are not — we are not participating in the Gen 3 with Ola. We are — we continue to be single-source on Gen 2.
Chirag
Gen 2. Okay. And sir, secondly, what does the —
Jaideep Wadhwa
Clarify that as of today, the production, I mean I at least — I mean, of course, Ola has announced this, but I mean as of today, the production is essentially of Gen 2.
Chirag
Yeah. Fair point. And the second, what are the alternative uses of MCU because industry is putting up with good amount of MCU capacities and nobody would like to rely on one stream of utilization for MCU. So are there — are you looking at alternate uses of MCUs or alternate industries or alternate segments?
Jaideep Wadhwa
Okay. So I think today we’ve got some really big questions going — when I say big questions, I mean questions that require a lot of detailed answer. So look, let me — what is an MCU? An MCU is essentially an inverter, which converts DC power to AC, right? And as we have — and as we are — and then also controls and regulates this, any permanent, any motor which requires such controls technically has some form of motor control unit. Therefore, a BLDC fan that is installed at-home also has a motor control unit there as do a number of motors that are used in different applications within an automobile.
So the — if you look at the core technology, the core technology is used very broadly. People are — you say our people putting up technology. According to us, you know, if you look at Sterling’s strategy, we don’t see ourselves only as an MCU manufacturer and we’ve talked about this in the past. We see ourselves as developing a power electronics competence because all of EV is about changing is about power electronics. It’s about changing either the current or the voltage. So that’s why we talked about chargers and so on and so forth, right? So.
Chirag
Yeah.
Jaideep Wadhwa
When you say that there is capacity coming up, yes, there is capacity, but you know that EV penetration in India is still very low. It will definitely grow much faster and I think that there is a lot of headroom for further growth within this industry too. So I hope I’ve answered your question.
Chirag
Yes. Sir, and last thing, you have been indicating in the past that you are trying to diversify outside of the single customer for MCUs and related product. So any update you’d like to share, any technical validation with any of the traditional or other OEMs, the larger — of the larger six players which are there in the market, you have been — you have been trying to penetrate them. So any update if you can share on that?
Jaideep Wadhwa
So I mean, I’m sorry, I’ll have to correct you to say we are not a single customer this thing. We have more than 30 active customer programs. We — pretty much every LCV in the market today, electric LCV in the market today is powered by our MCU. We had — we are supporting even heavy commercial vehicles, both electric as well as hydrogen-based on this. We have a fairly decent market-share across three-wheelers and in two-wheelers, we have a number of customers. So yes, Ola is a big customer for us. Ola also has 50% — depending on the month, they have anywhere between 25% and 50% market-share, right?
So because there are big — and because if they are 50% of the market, then obviously they will also dominate our — our production. But it is not to say that we do not have a very wide customer-base and we are with — there with established with startups, obviously, because that’s part of the EV ecosystem, but also with the incumbents of in the three-wheeler and as well as the light commercial vehicle and two-wheeler space.
Chirag
Great. Thank you very much. Thank you.
Operator
Thank you. Participants are wishes to ask a question may press star and one now. The next question is from the line of Ronak Sabarwal from PhillipCapital. Please go-ahead.
Unidentified Participant
Thank you for the opportunity, sir. Just wanted one question on the faster side. The margins in the faster business, the EBITDA margins have dropped this quarter. Any reason for the same which is —
Jaideep Wadhwa
Sorry,, I’ll have to repeat that please?
Unidentified Participant
Okay. Am I audible now?
Jaideep Wadhwa
Better.
Unidentified Participant
Yes, sir. That’s all. Just one question on the fastener side. The margins in the fastener business have dropped this quarter. Can you please help us understand the reasons for this?
Atul Aggarwal
So I think firstly, before I get to the quarter, I just want to mention that if you look at our nine months margin structures or operating margin structures are pretty much in-line with what we had last year. And I think our guidance was that we’ll be hovering the full-year around 15%. I think we are still on-track. I think the number for Q3 FY ’25 at 13.2% is an anomaly for that quarter because of certain one-time expenses on business development. We know we have signed contracts with Two different companies in China for matching, latching relays and DC contractors. So I think there were some success-based fee structures we had with advisers working, helping us to and identify product lines, etc. So I think those were one-time charges. But on — basically, we are not worried on holding our guidance that we will — our margin structures for the full-year will be around 15%. So we still hold that. I am not unduly worried of what happened in 3rd-quarter because there were non-operating reasons more of business development strategic costs, which we have incurred in that particular quarter. So just to give you a sense, if we take them out, our margin structures, our margin for the 3rd-quarter is always-on track as per the guidance given for the full-year as well.
Unidentified Participant
Thank you so much for that, sir. Sir, one more question on the latch and and the HVDC side. Have we got any customers or any of our customers for this — or any interest on these segments as of yet?
Atul Aggarwal
Yeah, yeah. So a lot of work has been done on that in the last one year. What you’re seeing today crystallizing into a business plan and an operating business going-live in Q2 FY ’26 is based on what 12 to 15 months of work, working with different customers, the working with different customers and product lines, product specs, pricing, et-cetera, etc. So yes, when we get into operations Q2 FY ’26, we will be — we will be operating with live customer orders based on interactions and the confidence we have for the business for that product.
Jaideep Wadhwa
If I can just add to what Akul said, as far as the HVDC contractors are concerned, we expect to be the first company in India to manufacture these locally. And right now, the entire or the entire requirement of in — for the EV industry is being served by imports. And obviously, you have different numbers of these contractors used in different vehicles. It could be one in some vehicles, it could be three, it could be up to eight in the charging stations. So different applications require different numbers. And as I said, all of these are being imported as of today.
Unidentified Participant
That’s it from my end. Thank you so much sir.
Operator
Thank you. Thank you. The next question is from the line of Jain from Nivesha Investment Management. Please go-ahead.
Shristi Jain
Hello.
Atul Aggarwal
Yeah. We can hear you.
Shristi Jain
Yeah. So in this budget, the government has viewed the BCD on the side. So I just want to ask if you’re expecting any BRS implementation on the partner. And if at all, we expect like OEMs who are currently importing from China and if they start sourcing from the domestic vendor, what can be the opportunity size for?
Atul Aggarwal
Can you can you repeat the first part of your question?
Shristi Jain
If we are expecting any BIS implementation on the because the government has reduced the.
Atul Aggarwal
So just Manan, just to on the BIS QCO, all our plants are certified under BIS QCO. We are working with all our existing customers under the new certification. We don’t expect — because of this BIS and QCO order, we do not expect any imports as a threat at all. In fact, it adds another barrier for foreign manufacturers to export fasteners into India because they need that certification, which pretty much most of them don’t have. So we don’t see any threat on that. And did I get my second part of the question when you say something about Mexico on the second part of the question?
Shristi Jain
No. So the second part is like if OEMs who are currently importing from China, right, say they start sourcing domestically from domestic vendors, so what can be the opportunity price for stolen to say?
Atul Aggarwal
Yeah. So the current — the current fastener imports are very minimal, but I don’t think most of the OEMs are importing anything of material value from China for automotive fasteners. I think what’s coming as imports, if I look at the spectrum would be Suzuki Group is still importing. They are coming from Japan and Thailand. Volkswagen and still bring in from Europe maybe. Hyundai, Kia is substantially domestic with the transplants in India. There are some imports coming from Korea.
Broadly you know Tata and Mahindra who currently have a double-digit market-share in the passenger vehicle business. Their buying is, I would say, dominantly Indian from Indian sources itself. So, fortunately, we don’t see imports a threat as in the past and going-forward on the automotive category. And I think our layer of BIS and QCO is adding another barrier for imports to come in.
Shristi Jain
And is this the same for wind energy customers like the customers? Okay.
Atul Aggarwal
Can you repeat that question again?
Shristi Jain
And is the import scenario, is it same for the windmill partners or the higher — higher sized 25 to fast mass.
Atul Aggarwal
So the windmill fasteners, I believe are certain percentage of windmill fasteners are imported. I don’t have a number on that. We are not — we are not — we don’t have a presence in that segment. So I may not be able to comment much on that segment. But I think, yeah, there are — I think a certain percentage of fasteners are being imported. Just to add-on to your first question on opportunities, because of BIS and QCO, in fact, the other SKUs we have from from Japanese customers have gone up for the fasteners they were importing from Japan and Thailand.
So there’s an opportunity, but these opportunities take about 24 months-to crystallize into revenue, where you start from RFI stage to RFQ to commercial closure to a sample development, you know building capabilities and eventually building revenue over-time. So I hope I answer my question then.
Shristi Jain
Yes, sir. That’s it. Thank you so much.
Atul Aggarwal
Thank you.
Operator
Thank you. The next question is from the line of Manan Vandhur from Wallford PMS. Please go-ahead.
Manan Vandur
Thank you so much for the opportunity. Can you hear me?
Atul Aggarwal
Yes, sir.
Manan Vandur
Okay. Yes. So my first question would be that there is a company called Aeka. Do we supply MCU to that company. That company also deals with LCV buses and three-wheelers.
Jaideep Wadhwa
Okay. Well, I’ll just — I’m not really supposed to mention customer names, but I’ll repeat my earlier statement that except for except for one customer we are supplying MCUs to all LCV manufacturers and that’s. Can I give customer name? So I just quickly did a quick check with Pankaj and he said I can mention, yes, the answer is yes, we do. So we are working with ICA and our units are being qualified in their — in their models. Sorry, I just needed to reconfirm that before I could answer that directly.
Manan Vandur
No, no issues. That’s great. That’s great. Sir, second question would be, have we started supplying to Jundai for the fasteners as well as MCU? Because last quarter you said that we have acquired.
Atul Aggarwal
Yes, we have. In fact, we get more RFQs and LOIs from Mundai as we speak. So I reconfirm like in our past calls, Mundai is a medium, long-term opportunity for our faster verticals and it’s on-track.
Manan Vandur
Okay. Got it. And sir, the third question would be that, even for the HVDC.
Atul Aggarwal
Once again, Manan, I just want to add one more aspect to that. Our — our magnetics business with Motive link or Young Electronics is an anchor business with Hyundai and Kia. We are hoping to have manufacturing facilities ready for that as well. In the next my guess will be eight to 10 months. That is also with Hyundai and Kia. So we are strengthening our relationship with Hyundai-Kia as a customer group across different product lines and I think that will help the Fastener vertical as well going-forward.
Manan Vandur
Right. Understood. That’s great. So the third question would be, in the HVDC side, I know that your presentation says that by FY ’30 we are going to have a certain amount of revenues coming from it. But even as you said that in Q2, we will start the commercial production. So could you give some sort of color Color that in FY ’26, how much could we do and what would be the margins from that side because we are the only ones making it in India. So we would be the only ones making it in India. So could you please explain something on that?
Atul Aggarwal
Yeah. So I think on an FY ’26 basis, we are looking at a marginal revenue of about INR30 odd crores only. So you got to understand you got to understand all these products need a lot of testing and validation at the customers end which is which obviously take time, but at the same time it creates barriers-to-entry for other players to come in. So these are all safety products. The customers need to build a comfort factor-in technology and technologies. Histology and the processes we have. So that we have already started closing business with our customers on that and we go into production.
Going on the margin structure, I think on a steady-state basis, we will probably because of low revenue in the first 24 months or so, we’ll have — we’ll have some operating losses. But I think on a steady-state basis going third, fourth year, this business is going to have a healthy double-digit margin structure.
Manan Vandur
Okay. So you are saying for the first two or three years, it can be a loss meeting.
Atul Aggarwal
Yeah, first couple of years operation wise, yes, this business will be losing money because the volume — volume buildup will take about 18 months-to get there.
Manan Vandur
Okay. So you’re saying that we can see profitability by FY ’27 or when could we see?
Atul Aggarwal
So I would — I would probably say more like FY — FY ’28 because we get operational in the second-half of FY ’26. So this — on a full-year basis, FY ’27 will be the first full-year, FY ’28, second full-year will be in profits.
Manan Vandur
Okay. And this case would be for the rest of the contracts also, like first few years, we would be loss-making and then profitable.
Atul Aggarwal
No, I don’t think I want to generalize for every product. I think the magnetics will have a different outlook. And so I — and the latching release as well. So each product-line will have a different timeline for profitability numbers.
Unidentified Speaker
It depends in-part on how big the line capacity is and what the utilization is. So because these are — all these lines are fully automatic, I mean not all, but some of the lines of HVDC line is fully automatic and we need that for — to be able to maintain the quality that we need to deliver to our customers.
Manan Vandur
Right. Got it. Just one last question would be that in the future, let’s say, four years from now on and five years from now on, our margins are currently at around 11% to 12 percentage kind of. So let’s see five years from now as a business-wise, our margins could be what.
Atul Aggarwal
So our margins are not 11%, our margins are 12. Around 12.5% plus. And our effort is we want to stay there on a consolidated level or maybe even improve on that number?
Manan Vandur
Okay, got it. That’s it from my side. Thank you so much.
Atul Aggarwal
Thank you.
Operator
Thank you. The next question is from the line of Kartik from Suesh Advisors. Please go-ahead.
Karthi Keyan
Yeah, good morning, sir. Wanted a couple of clarifications. One is, would GTEK have the ability to deliver an integrated motor. Would that help in any case? I mean, I’m just trying to understand if the market moves entirely to mid-drive motors, would you have an offering that we meet the requirements, either independently or with the help of?
Jaideep Wadhwa
So we’ve actually displayed our three — a and a 2-in-one at the Mobility show indicated, which means that we displayed a motor integrated with a control unit as well as a motor integrated with a control unit and a gearbox. Both these were displayed at mobility. These have been developed along with and we will be in-production with these I think our — we obviously will have different variants, but at least the first variant will be in-production, we hope by the end of this year. Year.
Now as far as will we move away from hub — look, the industry is still — you have to understand the industry is still going through its growth phase and an early phase. So we started-off — if you leave out the early-stage when you had companies like Hero Electric and Okinawa who are making vehicles and those companies were using hub motors. When Ola came in, Ola launched with a mid-drive motor and our controller and pretty much everyone followed their — their lead.
The government then changed the FAME policy and reduced dramatically the amount of subsidy that was made available. This forced the industry to change their to change their vehicle architectures and instead of a six kilowatt rated type of you know type of power rating. The power rating dropped down to-4 kilowatt because we wanted to — the industry wanted to be able to run with smaller batteries. Yeah. The 4 kilowatt bat — when the 4 kilowatt models were launched, they were all launched with Hub Motors because everyone again copied Ola’s lead largely.
Ola very recently-announced that they wanted to move away from Hub Motors back to mid-drive and there are several reasons for it, and I’m sure Ola will explain that in their call. So let me not try and venture that. But for several reasons they decided to move away from hub to mid-drive, back to mid-drive now, maybe industry will follow their lead or maybe you will have different companies following different parts. I personally believe that all technologies will co-exist. You will have hub motors and hub motors will exist for certain applications and mid-drive motors will exist for certain applications.
And — but our — like I said, as far as Sterling is concerned, we are positioned to be to be able to respond very quickly to customer requirements and the integrated motor and motor and controller units are available from our stable as of now and we’ll be in a position to — we will be in a position to start making supplies in the not so long — not-so-distant future.
Karthi Keyan
And when you said production by end of this year, did you refer to the current financial year or the current calendar year or the next financial year, sorry.
Jaideep Wadhwa
So we are looking at the next financial year. I mean, I’m sorry, I’m already thinking about the next financials.
Karthi Keyan
Sure. Sure. Sure.
Jaideep Wadhwa
Thank you for that clarification question.
Karthi Keyan
Yes. The other questions are again slightly a perspective kind of a thing, which is do you believe that there is a toying at the government level towards Chinese entities and therefore, would there be a rethink on whether these would remain as technical arrangements or is there a possibility that you could go back to a joint-venture structure? Just trying to understand how you see that situation, that situation.
Jaideep Wadhwa
Okay. So at a macro — at a geopolitical level, obviously the — if you — it’s very evident what’s happening, flights are going to restart between China and India. I be here that visas will be allowed for Chinese business visitors in the near-future. And generally, the announcements that are coming out from both China and India are positive. So yes, there is a throwing. No, as far as we are concerned, we don’t believe that we now want to revert to a joint-venture structure. The structure that we have right now is very good for us.
It works well for us and has served us well. Also, as we are adding new products, we are hoping to add new products in our portfolio, we will have other partners too. So we consider, you know, I’m not saying that we rule out a joint-venture in the future with the a Chinese or other company. But as of today, we see that technical licensing agreements is the way to go for us for — for the bulk of our growth initiatives.
Karthi Keyan
Thanks. One quick clarification, sir, and then I’ll get back-in the queue. So the integrated motor with the motor control unit, of course, would the import content be higher there versus your standalone MCU or would that be your no additional imports on that side.
Jaideep Wadhwa
If you look at the total bomb cost, if you look at the total bomb cost, it will be lower.
Karthi Keyan
Yes, but there will be some part. You are saying — you’re implying that some part will be imported.
Jaideep Wadhwa
I’m sorry. I was speaking over your other things. So can you repeat your question, please?
Karthi Keyan
I’m sorry, I shouldn’t have spoken. I was asking you. So the motor would be locally sourced or do you Believe that parts of those will also come from?
Jaideep Wadhwa
So that’s first one. So look, it’s not sourced. I mean we will make the motor, right?
Karthi Keyan
Okay.
Jaideep Wadhwa
The — and in terms of components, by and large, I mean, of course, the permanent magnets have to be imported from — mostly from China, but a lot of the other parks in a motor are localized. So that’s why I said that the overall local content in an integrated unit will be higher than the local content in an MCU because in an MCU, all the actives and passives are imported.
Karthi Keyan
Absolutely. Yes. Thanks very much for clarifying and very best wish you, sir.
Jaideep Wadhwa
Thank you.
Operator
Thank you. Next question is from the line of Sanjay Satwathy from Capital. Please go-ahead.
Sanjaya Satapathy
Yeah, hi. Sir, I’m listening to your call for the first time. So can you please kind of give a broad picture in terms of your top-line growth ambitions for next couple of years? And you have already said something about the margin that you were going to just maintain or slightly improve it. But in terms of topline, can you just help me get some kind of a hand?
Atul Aggarwal
So, let’s do one thing. I think we have a lot of people on the call. This is a much longer conversation. I’ll request Karan at SGA to set-up a separate call. Maybe you and I can spend some half-an-hour together to give you a big-picture because that’s a long conversation.
Sanjaya Satapathy
So, okay.
Atul Aggarwal
In the meantime, if you have any particular specific question.
Sanjaya Satapathy
Specifically, I just noticed that your number was sequentially down while some of your competitors, they have managed to maintain the numbers and some kind of growth tippering has happened. Is there anything that you want to specifically highlight?
Atul Aggarwal
Can we specific as to what number is down?
Sanjaya Satapathy
This revenue number.
Atul Aggarwal
I think revenue number we are up. I at both at the consolidated level and standalone level.
Sanjaya Satapathy
I’m talking about previous quarter that the September quarter.
Atul Aggarwal
So even if what is the September quarter. September quarter on a revenue basis, yeah, that was INR284 crores and we are at INR260 crores in the 3rd-quarter. But 3rd-quarter is always a weaker quarter. If you go back, you look at industry performance also in automotive industry overall, 3rd-quarter is a weak quarter because December is a huge shutdown month for large OEMs and 3rd-quarter normally is always the weakest in the four months we have. So it’s not a unique phenomenon for only.
Sanjaya Satapathy
Understood. Okay. I’ll look-forward to our later.
Atul Aggarwal
Okay. Thank you.
Operator
Thank you. The next question is from the line of Dira from PhillipCapital. Please go-ahead.
Dhiral
Yeah, good morning, sir. Thanks for the opportunity. Sir, on the new.
Operator
Sir, may we request you to please connect on the handset mode because your voice is sounding very muffled.
Dhiral
Am I audible now?
Atul Aggarwal
Much better.
Dhiral
Yeah. So on the new partnership that we have announced in last few months, maybe we have given a revenue target of around INR200 crore INR250 crore to be achieved by FY ’30. But let’s say, sir, what will be the capex requirement for each of the partnership maybe over next two years at least? And what could be the revenue potential for FY ’26 and FY ’27, although you have mentioned INR30 crore figure for the HVDC relay, but maybe overall for the partnership that we have announced, what could be the revenue potential for next two years at least?
Atul Aggarwal
So I — next two years are very short-term and we are starting a new business, but from a capex perspective, we are looking at a total capex for both the product lines coming under the same entity of Sterling Tech Mobility, STML, we’re looking at a INR30 crore INR30 crore odd capex in the next 18 months.
Dhiral
Okay. So this will be across the partnership that we have done or it will be individual INR30 crore?
Atul Aggarwal
Both the product lines put together?
Dhiral
Okay. Okay. And sir, on the ledging relay side, you also mentioned it’s a play on the import substitute. So how big is the import into India, particularly for this relay?
Atul Aggarwal
Can you repeat that last question again?
Dhiral
Sir, on the ledging relay, you talked about it’s a play on the import substitute. So just wanted to know-how big is the import into India?
Atul Aggarwal
Currently, all the imports are coming in from China. Our estimation is that the current imports are in the range of about INR150 crores to INR200 crores. From the customer we know, plus, there are a lot of this number is not tabulated fully but my against.
Unidentified Speaker
Can I? Can I just take a minute one second?
Atul Aggarwal
Yeah. So imports are about what INR200 crores right now as of today, but understand the market is really growing both in terms of EVs, hybrids, smart metering, et-cetera, it’s across different applications. So the market growth is dramatic going-forward in the next few years.
Dhiral
Okay. Okay. And sir, on the fastener side, what is our current capacity utilization and what is the utilization, particularly for the South plant that we have?
Atul Aggarwal
So the South plant is currently probably operating at about a level of 60%. I — like I said in my earlier call-in the last few quarters, we — with the capacities we have laid out, we can do a revenue of between INR800 crores to INR850 crores depending on the product mix. So I think we still have a headroom for about another INR130 crores of revenue coming from where we are right now.
Dhiral
Okay. So maybe for the FY ’26, particularly, what kind of growth we are envisaging?
Atul Aggarwal
So like I said, repeating what I said in my calls earlier, is a very mature business with us. We’ll be up 7%, 8%, 9% this year. The industry is only up 3%. Our guidance going-forward for the Fastener business maintains the same that we will grow at a few percentage points faster than the industry. But this business is not going to grow dratically a very-high growth. Having said that, it has steady-state margin structures. It generates a lot of free-cash flow and our customer profiles are very good and we are adding more-and-more critical products as we go-forward.
Dhiral
Okay. And sir, lastly, on the margins of the Fastener side. So maybe from Q4 this quarter onward, we will be again bounced back to 15% kind of a margin that we have seen deep in the Q3.
Atul Aggarwal
On a full-year basis will be close to 15%, yes.
Dhiral
Okay. And maybe next year, once the South plant also get utilized.
Atul Aggarwal
It will go on second. Just to add to that, if you see our nine-month numbers, we are at 14.4% vis-a-vis 14.5% last same-period last year. So we are on-track what we did. 3rd-quarter was an anomaly, like I said, because of business development strategic costs we had, which are one-time, which have — which have gone to our P&L, but operationally, our margin structures are close to 15% and our guidance going-forward is still 15%. On a full-year basis, we’ll be close to that.
Dhiral
Okay, sure. Thank you so much, sir. Thank you.
Operator
Thank you. The next question is from the line of Chirag from White Pine Investment Management. Please go-ahead.
Chirag
Thank you for the opportunity again. And I’m coming back to the integrated motor unit that you indicated to 2×1 or 3×1 that you had showcased at Bharat 5 and they were really good products actually the showcase. Sir, what I wanted to understand is how does the pricing or the value changes? And in that what would be your — in the current product that you have shown, what is your value addition or your major contribution over there? Because some parts would be kind of an assembly part of business given the current capabilities that are getting old.
Jaideep Wadhwa
Okay. So I’ll just say this that first of all, you know, a motor and controller unit is slightly cheaper for the end-customer than the separate units.
Chirag
Yes.
Jaideep Wadhwa
I won’t say hugely, but there is a cost-saving. And there is also obviously a cost-saving for the end-customer because they don’t have the cabling and all of that. So they actually save money there also. Okay. Now, in terms of what is going to be our value-add, I think it’s a little early for me to be able to give that detail that’s homework that we are doing currently. I don’t have that number. I’ll say that it’s going to be higher than as I said in a response to an earlier question, the value-add for the integrated unit will be higher than the value-add for just an a MCU . And the second question — the second thing I’ll say is that in terms of the make-buy, I think there’s still a lot of homework to be done. It will be very difficult for me to predict that right now. Maybe in three to six months, I’ll be in a better position to answer that in — with some — with some specifics.
Chirag
And sir, if MCU is 100 on the current MCU, how does 2 in 1 cost change? Will it become 200 or it will be 300? And how does the 31 cost would be? So on indexation basis, how does it change, if you can help us understand.
Jaideep Wadhwa
I’m — I hope I don’t — I hope I get this right. Typically, you would have the MCU would be say 40 to 45. I’m talking of — I’m talking about standalone and the motor would be 55 to 60 approximately. The motor is slightly more expensive than an MCU, typically for a given — for a given power rating. So let’s just say it’s 45, 55 adding up to 100 an integrated unit will possibly be somewhere like 90 or 95%.
Chirag
Okay.
Jaideep Wadhwa
So there will be a 5% to 10% reduction in the cost of the two units as compared, so say 10% for the timing. So that’s what we can we can see in the in an integrated unit.
Chirag
And when you do a three by one kind of a display that you that was really exciting. The three by one kind of so this 95 will go to what 200?
Jaideep Wadhwa
No-no, no. You know, again, now that we have lot of variables because the unit that we’ve developed right now IS-5 is to — 5.6 is to one gear ratio. Now as different gear ratios have different gear ratios will have different costs though not very much. But I would say again I don’t have the numbers in front of me. I’m going to say a gearbox would be maybe that would — in a standalone unit would go up to from 100 to say maybe 125 or so, and an integrated unit, the gearbox will still be about, say, 90 plus 20, maybe 110, 150.
Chirag
Okay.
Jaideep Wadhwa
And again, I have to say, I don’t have numbers — exact numbers in front of me, I’m just giving you very approximate idea.
Chirag
This is really helpful, sir. I understand it will change. I understand it will be a bit different, but in the initial phase, this is really helpful to understand.
Jaideep Wadhwa
Yeah. And the other thing, obviously, the revenue potential for companies like — companies like us who are doing integrated units, the revenue potential is nearly double because instead of doing one part of the unit, you’re doing two-parts of — one part of the powertrain, you’re doing two-parts of the powertrain or even three parts of the powertrain.
Chirag
Okay. And I presume you would have already started the discussion or showcasing the product to the customers for — or that process would have started, right?
Jaideep Wadhwa
Yes. We’ve been very busy since Bharak Mobility.
Chirag
Great. Thank you very much.
Jaideep Wadhwa
Thank you.
Operator
Thank you. The next question is from the line of from Research Labs. Please go-ahead.
Mukul
Hi, thank you for considering my question. Actually, I have one question regarding why is the like current production cap, what is the current production capacity for MCO and is there any plans to for like scaling this further?
Jaideep Wadhwa
Yeah. Our current capacity is, I mean, depending on how we configure the shifts, etc., is over 700,000 units. We had — when we had started the expansion, we had talked about getting — building up a capacity of 600,000 units. You may remember that. When we’ve actually laid out the plant and looked at the efficiencies, we actually feel that we can do more than even 600,000. We do not anticipate adding more capacity to the lines right now. What we do see is more complexity coming in, in terms of models. So for example, if we add any other power electronics products, so we add these multifunction units that we were just speaking about, then those — those don’t have the same throughput as a standalone MCU.
So depending on the product mix, you will see different capacities. But today we could we could produce 60,000 units a month or 7 lakh 20,000 units a year with very little — I mean, I would to use to use a phrase without breaking a sweat.
Mukul
Okay, okay. Thank you, sir. And also, do we see like any risk in becoming too dependent on foreign technologies?
Jaideep Wadhwa
So very good question. I think we’ve talked about this in the past. The strategy that we’ve had at Sterling and from the very beginning of our — we started in 2018 looking at EVs. Our strategy from the beginning has been to be early movers and the reason to be early movers is that it helps us understand the market, understand the needs and it’s very difficult to do a development in isolation because you don’t know-how the market is evolving. We talked about you know-how the market moved from 6 kilowatt to-4 kilowatt and so on and from hub and to mid-drive and so on. So there’s a lot of movement that happens in the market. If you’re doing a standalone development, you can very easily get it wrong.
So our strategy has been to enter the market with technology partners, get into the market early, learn the customer requirements, work closely with the customer on the next-gen. But in the next-gen, we want to be independent and you also are aware that we have announced in the past and we’ve even displayed at Bharat Mobility, a unit that was developed, a motor control unit that was developed and produced by our team between Bangalore and Delhi.
So definitely, we are not looking at only importing technology. We are definitely looking at building our own IP, but it’s a phased thing. The first thing is get into the market, understand the market, serve the customer requirements and then build the capability basis what we’ve learned in the initial stages.
Atul Aggarwal
So just to —
Mukul
Thank you for. Thank you for the response. And one last question, I’ll ask — I’ll ask. Like we can see new verticals are like making loss. And will it affect in the further like future quarter, will it affect the overall profitability of the business?
Atul Aggarwal
Because these are marginal numbers. The loss numbers margin numbers for the balance sheet size we have or the P&L we have. So I don’t think it’s going to have any large material impact on our overall performance.
Mukul
Okay. Okay. Thank you, sir.
Atul Aggarwal
So going to technology, I just want to add more to on what was saying. We may be getting a technology more overseas, but we are doing that to jumpstart the business for customer acquisition, for understanding the product-line, the technologies. But our long-term plan is to get more — to build centers of excellence to build our own tech centers and build-on top of what we have and get more-and-more sophisticated and independent on all these things, which is what we have done in our MCU business there’s a lot more competence there the team has been able to develop an independent MCU now with IP owned by us. So it’s a process which takes some time to do, but we are very clear that we want to be independent long-term and create technology bases in our home country.
Mukul
Okay. Thank you, sir. Best of luck.
Operator
Thank you. Okay. Thank you. The next question is from the line of Kush Nahar from Electron PMS. Please go-ahead.
Khush Nahar
Hello. Thanks for the opportunity. Sir, sir, one question considering the opportunities that we have ahead and the new products that we are introducing, what kind of CAGR sustainable revenue growth we see for the next three to five years?
Unidentified Speaker
So are you talking about on a consolidated level or standalone level?
Khush Nahar
Consolidated level.
Unidentified Speaker
So you know, Kush, our estimate is we are looking at — we have a tough year coming up next year because we are bringing a lot more products into our portfolio. There has been a realignment of some customers or some product lines. It’s a tough year. But I think if we are able to do a CAGR of about 10 odd percent in the short-term, we’ll be happy with that.
Khush Nahar
Right. And just to confirm with 15% sustainable EBITDA margins In the new product also consolidated basis.
Unidentified Speaker
Correct. So I think the DC contact and the latching relay business is at a double-digit margin structure. Fasteners will be hovering around a similar margin structure. So only the motor control unit business has a lower-margin structure we work with —
Atul Aggarwal
But still double-digit.
Unidentified Speaker
But still double-digit. And at the same time, having said that, it’s also a technology-intensive business, but the return on capital is very healthy in all our businesses, especially in all our new businesses.
Khush Nahar
Okay. Thank you for the detailed answer, sir. Just one last thing. Sir, you mentioned that new products we’re going to introduce apart from the recent ones. So these will be adjacent to the powertrain related products only or anything else you’re planning?
Unidentified Speaker
Yeah, powertrain and power electronics.
Khush Nahar
In that segment only will be there.
Unidentified Speaker
Yes.
Khush Nahar
Okay. All right, sir. Thank you.
Unidentified Speaker
But — and like I said, what is an EV? I mean, the EV is only about changing either voltage or current that’s what that’s everything that we do in an EV.
Khush Nahar
And all right. Thank you.
Unidentified Speaker
Thank you.
Operator
Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Atul Aggarwal
So thank you, everybody. Thank you for taking our time-out and spending this morning with us. We believe we’ve had a good quarter and last nine months. We are on-track to our guidance giving for the full-year FY ’25. I heard some questions on margin structures. Let me reinforce by saying that 3rd-quarter margin structures are not representative of the full-year margin structures. They were more on strategic costs, one-time cost structures.
On a full-year basis, our margin structures are still stable. So there’s no cause of concern from our side on the margin structures. And from a revenue perspective, we are on-track to what we have projected for ourselves for this year FY ’25. Thank you very much. If any questions, please reach-out to our advisors SGA and we are happy to get onto a call one-to-one with you and take any more questions you may have. Thank you.
Operator
Thank you. Ladies and gentlemen, on behalf of Sterling Tools Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.