Shares of auto parts maker Sterling Tools rose nearly 6% to Rs 353 on February 15.

Sentiment surrounding the stock jumped following the release of third-quarter results. In the third quarter, the company’s net profit rose 63.5% year-on-year to Rs 10.1 crore, its operating income rose 33% to Rs 151.3 crore, and its EBITDA margin improved 60 basis points to 15.7%.

About 98% of the company’s revenue comes from two-wheelers. Three-wheelers and light commercial vehicles account for 1% of each revenue mix.

The fastener maker is diversifying into electric vehicle components in 2020. As the world moves decisively toward the electrification of mobility, parts makers who adapt quickly appear to be rewarded by the market. Sterling Tools has partnered with Jiangsu Gtake in Shenzhen (China) to form a 100% subsidiary, Sterling Gtake E-mobility Limited (SGEL).

The two-year PBT-positive EV vertical had a turnover of Rs 119 crore in 9MFY23, 17 times higher than its turnover of Rs 7 crore in 9MFY22.

SGEL’s focus is on manufacturing Motor Control Units (MCUs). The MCU is the interface between the EV battery and its motors, thus controlling the motion and acceleration of the vehicle. According to the company, the MCU accounts for 10% of the cost of an electric two-wheeler.

SGEM is the sole MCU supplier to India’s largest 2W EV manufacturer and has purchase orders from 14 EV original equipment manufacturers (OEMs).

The company has had a tumultuous decade. From 2014 to 2017, it surged from Rs 30 to Rs 430, corrected in half to Rs 224 in 2019, and remained largely sideways until June 2022. It has since appreciated nearly 61% to touch CMP.

Looking ahead, the company is working on expanding into new geographies, exploring inorganic growth opportunities and developing new products to become a one-stop shop for electric vehicles, among other goals.