Shares of Sterling Tools soared as much as 15% on Thursday after the automotive fastener manufacturer signed a Memorandum of Understanding (MoU) with South Korea’s Yongin Electronics, a supplier of components to the Hyundai Kia Motor Group.

The stock opened at ₹338.95 against its previous closing price of ₹336.50. Shares of the small-cap company rose 14.6% to hit an intraday high of ₹385.60 apiece on the National Stock Exchange (NSE).

“This strategic agreement, expected to generate ₹250 crore in business over the next 5 years, marks a crucial step in advancing the production of electric vehicle (EV) and electronic components within India,” the company says in a regulatory filing.

To accelerate the production capacity, Sterling Tools will set up a new greenfield manufacturing facility in the country.

“As a key supplier of components, Yongin Electronics offers its technological expertise to the India’s growing EV sector. This association strengthens Sterling’s EV component portfolio by increasing local value addition and backward integration into passive components, in line with the 'Atma Nirbhar Bharat' vision of the Government of India,” the company says.

“The MoU enhances Sterling’s capability to provide solutions for EV & Hybrid space, as well as other automotive applications, incorporating the latest technology from Yongin. This collaboration between Sterling and Yongin covers the entire portfolio of magnetic components required for various applications in India’s EV and electronics manufacturing growth,” it adds.

Commenting on this new association, Anish Agarwal, director from Sterling Tools, says, “This MoU demonstrates Sterling’s commitment to developing the EV and Electronics ecosystem and contributing to “Make In India”. We are one step closer to our goal of strengthening our presence and offerings as a provider of green energy solutions in the automotive industry.”

"We recognise the significant potential within the Indian EV market. It brings us great pleasure to announce our partnership with Sterling through the signing of an MOU. We are prepared to embark on a journey of mutual growth and collaboration within the Indian EV industry, contributing positively to its advancement,” says K. H. Kim, CEO of Yongin Electronics Co.

Yongin Electronics is a South Korean company incorporated in 1977. The company designs and manufactures EV components like Transformers, Chokes, Filters and other sub components for the EV Industry. The company has operations in South Korea, Vietnam and China to cater to its OEM customer base.

“As the automotive landscape continues to evolve, the signing of this MoU positions Sterling Group to spearhead the transition towards a sustainable and technologically advanced future in the automotive industry,” it says.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.