Target: ₹965
CMP: ₹898.75
Steel Strips Wheels Ltd expects its topline to grow by 15-18 per cent y-o-y in FY23 to ₹4,100-4,200 crore. The growth is expected to be primarily driven by the management's focus on improved product mix, high-margin alloy wheels, CV, agribusiness and growth in overall sales volume. Alloy wheels command higher realisation at ₹4,000-4,500 per wheel, while steel wheels cost ₹1,000-1,100 per wheel in the PV segment.
Optimum capacity utilisation driven by auto-recovery would help SSWL improve profitability over the next two years. The Dapper plant (dedicated to 2W, PV, and tractors) operated at 84 per cent capacity utilisation and the Chennai PV plant operated at 56 per cent utilisation.
Out of the overall borrowing, the company’s term loans stand at ₹375 crore and working capital stands at ₹Rs 401 crore with total debt at ₹775 crore. Repayment of ₹95 crore in FY23 and ₹90 crore in FY24 is expected going forward.
SSWL is expected to be a beneficiary of the demand revival in the Auto segment, especially the CV, and Al-alloy wheel segment. We expect SSWL to outperform the industry growth given its sticky relations with OEMs across all auto segments viz. 2/3W, PV, CV, and tractors.