Steel Strips Wheels Limited Finest Producers of Steel

& Alloy Wheels

Steel Strips Wheels Limited is engaged in designing and
manufacturing automotive steel wheels. SSWL is a leading supplier to
Indian as well as Global Automobile Manufacturers. The companys
product range includes Steel wheels for 2 and 3 Wheelers, Passenger
cars, Multi-Utility Vehicles, Tractors, and Trucks. The company has
three manufacturing units located at Dappar (Punjab) and Oragadam
(Chennai), where car wheels are manufactured, and the third unit at
Jamshedpur (Jharkhand) for truck wheels. They have a total capacity
of manufacturing 17 million wheels. The company exports to Europe
and South America also.
Steel Strips Wheels Limited is one of the Multibagger Stocks, identified by Dynamic levels
Research based on technical and fundamental research.
SSWL share price has touched a 52 week high of Rs. 587 on 22-Aug-2016 and a 52 week
low of Rs. 282.40 on 17 -Feb -2016, and is currently trading at Rs. 566.15.

Share Holding
The promoters holding in the company stands at 59.01% while Institutions and Non-Institutions
hold 0.55% and 40.43% respectively.

Financial Analysis
Quarterly Results
During the quarter ended 30th June 2016, the total income from operations of Steel Strips
Wheels Limited reported a growth of 5.35% on the Q-o-Q basis and stood at Rs.325.40 crore
against Rs. 308.88 crore in the quarter ended 31st March 2016. A boost in total income from
operations shows strong development in the companys business.

The operating profit of Steel Strips Wheels Limited for the quarter ended 30th June 2016 stood at
Rs. 30.44 crores against Rs. 30.21 crore in the quarter ended 31st March 2016, growing by
0.76%.
PAT grew by 0.59% and stood at Rs. 18.60 crores for the quarter ended 30th June 2016 against
Rs. 18.49 crore in the quarter ended 31st March 2016.
EPS stood at Rs. 12.15 for Q1FY17 against Rs. 12.11 in Q4FY16.

Annual Results
For the year ended March 31, 2016, Steel Strips Wheels Limited, on Standalone basis, reported
Net Sales of Rs. 1181.89 crore compared to Rs. 1152.71 crore in FY2015. The figure indicates
the marginal growth of 2.53%.
For the year ended March 31, 2016, Steel Strips Wheels Limited on Standalone basis reported
PAT of Rs. 61.18 crore compared to Rs. 39.40 crore in FY2015 registering growth of 55.28%.

Investment Rationale

SSWL has entered into an agreement with a South Korean company named Kalink Co.
Ltd to set up an alloy wheel manufacturing facility at Mehsana, Gujarat. The production
capacity will be of 1.5 million wheel rims and painting of 2.5 mn low pressure die casting
with diamond cutting. The project is expected to be commissioned in February 2017, and
commercial production is expected to start by Q3FY18.
The company has established a modern and high-tech steel process unit at Dappar
(Punjab) for Steel Pickling, Slitting and cut to Length with a capacity of 20000-ton steel
with a Capex of about Rs.16 crore.
The company is implementing expansion plan at Chennai for manufacturing 1 million
wheels with a capex of Rs. 175 crore. The company expects to export 50% production to
US, and Europe when the plant goes into production in Q3FY18. At peak utilization the
sales generation is expected to be Rs. 350 crore.
Change in volume mix will help in better margins - SSWL expects positive growth in all
segments of vehicle categories. While tractor sales could be recovered in FY17 and
beyond due to better monsoons, the truck and OTR segment has been growing and will
continue to grow going forward.

Government has imposed anti dumping duty on imported alloy wheel rims for 5 years as
below:
China: $2.15/Kg Korea: $1.18/Kg Thailand: $1.06/Kg. This anti dumping duty has made
import unviable, thereby, widening the demand supply gap by additional 1Mn wheel
rims.

The demand for Alloy wheels is growing. The shift is happening from Steel Wheel Rims
to Alloy wheels across all variants of passenger vehicle.
Demand Supply Gap which is expected to reach around 2.6mn wheel rims in 2018-19

Investment Opinion
At CMP of Rs.556 the stock is trading at a P/E of 12.96 we recommend a buy on the stock
with a price target of Rs. 600.

Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the research team.
Users are advised to use the data for the purpose of information and rely on their own judgment while making investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022

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Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/ Research Analyst/ his
Relative:

Do not have any financial interest / any actual/beneficial ownership in the subject company.
Do not have any other material conflict of interest at the time of publication of the research report
Have not received any compensation from the subject company in the past twelve months
Have not managed or co-managed public offering of securities for the subject company.
Have not received any compensation for brokerage services or any products / services or any compensation or other benefits from the subject
company, nor engaged in market making activity for the subject company
Have not served as an officer, director or employee of the subject company

Article Written by

Ammar Ali Mirza