Sterling Tools Ltd - BUY - TP Rs.350 - Result Update - Kotak

- STL reported strong all round performance in 2QFY18. Robust growth in automobile volumes across segments translated into 21% YoY revenue growth for the company. Operating leverage on strong revenue growth led to EBITDA margin expanding YoY from 20.1% to 23.2%. Strong operating performance led to 62% YoY jump in net profit. As compared to 1QFY18, the performance of the company was strong. We expect revenue growth to be driven by healthy recovery in automobile demand. STL's tie-up with Meidoh is expected to help the company gain additional business in the passenger car segment and contribute towards revenue growth. Operating leverage from revenue growth coupled with expected increased share of special fasteners in the revenue mix is expected to keep EBITDA margins healthy. We retain BUY on the stock of price target of Rs350 (earlier Rs335), valuing at 22x PER FY19 earnings.

Shares of STERLING TOOLS LTD.-$ was last trading in BSE at Rs.316.65 as compared to the previous close of Rs. 300.9. The total number of shares traded during the day was 164702 in over 5670 trades.

The stock hit an intraday high of Rs. 341.4 and intraday low of 306.05. The net turnover during the day was Rs. 53600405.

Source : Equity Bulls

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