We retain BUY with a revised target price of Rs 877 (earlier target Rs 590) valuing the company at 5x EV/EBIDTA FY23E giving an upside of 32%.

We re-initiate coverage on Steel Strip Wheel Ltd. (SSWL) with a BUY recommendation and price target of Rs 590/- on back of expected volume recovery of automobiles viz., 2W, PVs with personal mobility gaining currency and tractors on back of good Rabi harvest and consecutive normal monsoon.

Quick Research Note

industry (industry size ~ 8,200 crore), with presence in legacy steel wheel rims as well as emerging alloy wheel rims segments Increasing penetration of alloy wheels in PVs and opportunity created by imposition of antidumping duty on Chinese products in the...

COVID 19 IMPACT: EXPORTS TO SUFFER; FY21 TO BE VERY WEAK

Steel Strips Wheels Limited (SSWL) posted revenues of Rs 344 cr (29% Y-o-Y, 5% Q-o-Q) in Q3FY20 with another quarter of dismal performance due to sharp decline in wheel volumes for CV industry (down by ~60% on YoY basis).

Steel Strips Wheels Limited (SSWL) posted revenues of Rs 362 cr (?32% Y-o-Y, ?23% Q-o-Q) in Q2FY20 due to very sharp decline in volumes for CV industry

Steel Strips Wheels Limited (SSWL) posted revenues of Rs 470 Cr. (?6% Y-o-Y, ?10.6% Q-o-Q) in Q1FY20 due to sharp decline in volume. The EBITDA margins compressed by 91 bps Y-o-Y, but improved slightly Q-o-Q (? 109 bps) due to rise in share of exports and alloy wheels

Steel Strips Wheels Limited's (SSWL) posted revenues of Rs 527 Cr. (? 22% Y-o-Y, ?9% Q-o-Q) in Q4FY19. The EBITDA margins compressed by 237bps YoY due to rise in raw material cost and negative operating leverage while PAT was reported at Rs 19.9 Cr.

Steel Strips Wheels Limiteds (SSWL) posted revenues of Rs 501 Cr. (up 61% Y-o-Y, up 16% Q-o-Q) in Q1FY19. The EBITDA margins corrected by 215bps YoY due to rise in raw material cost and PAT was reported at Rs 21.5 Cr.

Steel Strips Wheels Limited's (SSWL) in 4QFY18 posted revenues of Rs 431 Cr. (up 14% Y-o-Y, up 8% Q-o-Q) due to new CV line in Chennai contributing to the top-line from February'18.

Steel Strips Wheels Limiteds (SSWL) in 3QFY18 posted revenues of Rs 397 Cr. (up 19% Y-o-Y, up 5% Q-o-Q) due to robust wheels volume growth of 11% on a YoY basis. PAT was at Rs 18.1 Cr. (up 44% Y-o-Y, flat Q-o-Q) due to higher contribution of heavier wheels (CV, tractors, OTR).

Steel Strips Wheels Limited's (SSWL) in 3QFY18 posted revenues of Rs 397 Cr. (up 19% Y-o-Y, up 5% Q-o-Q) due to robust wheels volume growth of 11% on a YoY basis. PAT was at Rs 18.1 Cr. (up 44% Y-o-Y, flat Q-o-Q) due to higher contribution of heavier wheels (CV, tractors, OTR).

Steel Strips Wheels Limited's (SSWL) in 2QFY18 posted revenues of Rs 378 Cr. (up 30% Y-o-Y, up 21% Q-o-Q) due to robust volume growth in all wheel segments particularly heavy wheels (CV, Tractors, OTR) on a Q-o-Q basis.

Steel Strips Wheels Limited's (SSWL) in 4QFY17 posted revenues of Rs 380 Cr. (up 23% Y-o-Y, up 13% Q-o-Q) led by higher wheels volume growth observed in CVs due to strong pre-buying of BS3 vehicles, Tractors ahead of monsoon as well as consistent growth in passenger vehicles.

BUY Steel Strips Wheels Ltd at Rs. 509 add on Dips to band at Rs. 451-469 for the Sequential Targets Rs. 593-652.

Steel Strips Wheels ltd. (SSWL) is a Chandigarh based company, engaged in designing, manufacturing and marketing of Steel Wheel Rims for Passenger cars, Utility vehicles, 2/ 3 wheelers, Tractors, Light/ Heavy commercial vehicles and OTRs (over the roads). Company has manufacturing capacity of 16.6 million units and manufacturing plants are strategically located at Punjab (Dappar), Tamil Nadu (Oragadam, Chennai) and Jharkhand (Jamshedpur). Some strategic investors invest in SSWL including Tata Steel Ltd, India with 8.26% stake followed by Sumitomo Metal Industries, Japan 5.59%, GS Global, South Korea 2.48% and Kalink, South Korea- 1.30%.Ashika Stock Broking recommend a BUY with a TP of Rs 578.

Trendlyne has 1 report on SSWL updated in the last year from 1 broker with an average target of Rs 578.