Steel Strips hits new high, up 5% on record net turnover in September

Shares of Steel Strips Wheels (SSWL) hit a new high of Rs 291.35, on rallying 5 per cent on the BSE in Tuesday’s intra-day trade after the company said it achieved its highest-ever monthly net turnover of Rs 401.88 crore in September 2023, recording year on year (YoY) growth of 11.7 per cent. The auto components & equipments company had recorded net turnover of Rs 359.78 crore in September 2022.

The company’s gross turnover grew 9.33 per cent YoY to Rs 486.99 crore, as against Rs 445.42 crore in the same month of previous year. SSWL achieved record net turnover on the back of strong exports, which jumped 457 per cent YoY in volume terms and 183 per cent YoY in value terms.

SSWL expects a sharp pull back of export demand with alloy exports being the key factor for Financial year 2023-24. The key indicators from our global customers indicate the lowering of inventory and demand stabilization coming to the market. Exports of alloy wheel presents a long term trend for the company and have the potential to reach Rs 1,000 crore of exports by financial year 2025-26.

SSWL is primarily engaged in the business of manufacturing Steel Wheel Rims and Alloy Wheel Rims catering to different segment of automobile industry. It currently has four plants in India with total production capacity of around 23 million wheels per annum (including 3 million wheels per annum for alloy wheels).

SSWL is looking to expand its presence in alloy wheel with global passenger car segment customer. In view of that, the company is expanding the capacities to cater the global demand. Globally Alloy wheel is very popular with more than 80 per cent wheel penetration. It gives huge export opportunity to SSWL to imitate the steel wheel exports story.

The stock surpassed its previous high of Rs 289.75 touched on September 12, 2023. Thus far in the financial year, market price of SSWL has been nearly doubled or zoomed 97 per cent. In comparison, the S&P BSE Sensex has rallied nearly 11 per cent during the period.

Recovery post Covid is continuing strong and diversified product portfolio is helping the company to grow amid segment wise challenges of the automotive industry. The financial year 2022-23 being tough for export markets due to ongoing recessionary fears in EU & US, Domestic market helped SSWL overcome the pressure. The improving domestic market matrix ensured a double digit revenue growth for the company.

SSWL is expecting to maintain double digit revenue growth with expectation in the exports market revenue. Domestic markets are now balanced with stable growth outlook. The sharp focus will be on Return on Capital (ROC) and improving of other financial ratios. Alloy wheel segment will remain capex heavy to meet the domestic as well as export opportunities. This vertical remains high growth opportunity area and will have huge revenue accretion potential for the company, said SSWL in FY23 annual report.

SSWL is looking forward to increase its global presence with major focus on alloy wheels. The company is expanding its capacity to cater this global opportunity and take up global market share of 1 per cent in next 3 years. The global automobile market growth will remain a focus area and presents huge opportunity for SSWL to grow. The alloy wheel segment of the company has the potential to grow at more than 15 per cent volume growth each year with export opportunity, the company said.