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Steel Strip Wheels Ltd (SSWL), a leading Indian wheel manufacturer, is planning to expand its annual wheel manufacturing capacity to 5.3 million units by FY26 from the current 4.8 million units in FY25. The expansion comes as the company positions itself to capitalize on expected orders from Maruti Suzuki and anticipates a gradual recovery in both European and US markets.
Steel Strip Wheels is an auto ancillary company specializing in the production of steel and alloy wheels. In FY25, the company reported revenue of Rs 4,429 crore with an EBITDA of Rs 484 crore. The company’s product mix currently consists of approximately 68% steel wheels and 32% alloy wheels, with the latter segment growing steadily.
Growth Strategy and Future Outlook
The capacity expansion is part of SSWL’s broader strategy to leverage growth opportunities in both domestic and export markets. The company’s management has indicated that it expects orders for alloy wheels from Maruti Suzuki to materialize in the second half of FY26, which will help increase alloy wheel capacity utilization. Currently, this product is in the testing stage with Maruti.
SSWL is betting heavily on export growth, with export revenue standing at Rs 561 crore in FY25, showing a 22% year-on-year increase. The company has set an ambitious target of reaching Rs 1,000 crore in export revenue by FY27. The United States accounts for 64% of SSWL’s total exports, followed by the European Union at 32%.
The company believes India will benefit from a favorable US tariff structure compared to competitors in China, Vietnam, and Thailand. This competitive advantage is expected to drive further export growth.
Besides wheel manufacturing, SSWL is also doubling down on its aluminum knuckles business. In FY25, the company sold 47,000 units of aluminum knuckles, generating revenue of Rs 11.43 crore. The production capacity for this product is expected to double in FY26, reaching commercial production levels.
Overall, volume growth in FY26 is expected to be driven by market share gains in the tractor segment, increased export demand, a gradual recovery in the domestic commercial vehicle segment, and strong volume growth in the two/three-wheeler segment. The company anticipates steel volumes to grow by 4% year-on-year and aluminum volumes by 12% in FY26.
Q4FY25 Financial Performance
In the fourth quarter of FY25, Steel Strip Wheels reported sales of Rs 1,234 crore, which was in line with estimates and represented a 15% increase both quarter-on-quarter and year-on-year. However, the company’s EBITDA of Rs 134 crore missed estimates by 9%, with margins of 10.9% falling 96 basis points short of expectations.
This margin miss was primarily attributed to lower gross margins, which were partially offset by reduced other expenses. The company’s adjusted profit after tax stood at Rs 60.6 crore, beating estimates by 7% and showing a growth of 24% year-on-year and 27% quarter-on-quarter.
The better-than-expected profit performance was supported by lower interest and depreciation costs. The EBITDA per wheel for Q4FY25 stood at Rs 270, higher than the Rs 253 recorded in FY24, indicating improving operational efficiency.
Debt Reduction Efforts
SSWL has been actively working to reduce its debt burden. The company’s total debt has decreased from Rs 1,048 crore as of March 2024 to Rs 824 crore, of which Rs 370 crore is long-term debt. Annual debt repayments are scheduled at Rs 100-110 crore, funded through cash accruals from business operations.
The company has earmarked a cumulative capital expenditure of Rs 600 crore for FY26 and FY27, which will support its expansion plans.
Analyst View
Axis Securities maintains a “BUY” rating on Steel Strip Wheels with a target price of Rs 265 per share, implying a 15% upside potential from the current market price of Rs 231. The brokerage values the stock at a 17x PE multiple on FY27 EPS.
Axis Securities expects the company’s revenue, EBITDA, and PAT to grow at 9%, 11%, and 12% CAGR over FY25-27E, respectively. This growth is anticipated to be supported by a gradual recovery in the commercial vehicle and tractor segments, a rising share of alloy wheels, higher exports, and the introduction of aluminum steering knuckles.
However, the brokerage also cautions about increased competition from peers like Wheels India, Maxion, and Minda Kosei as a key risk to their estimates and target price.
This article first appeared on Autocar
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