India Ratings and Research affirms Steel Strips Wheels's rating at 'AA-' with 'stable' outlook

Steel Strips Wheels (SSWL) said that India Ratings and Research has affirmed the company's long-term rating at 'IND AA-' with 'stable' outlook.

The agency has also affirmed the companys short-term rating at 'IND A1+.

India Ratings and Research stated that the affirmation reflects a sustained improvement in SSWLs revenue and credit metrics over FY20-FY24, a resilient operating profitability, range-bound EBITDA margins, a reduction in promoters shares pledge to nil as of September 2024 from 4.92% in September 2023 and an increased share of higher-margin business (alloy wheels) in the revenue, leading to a significant improvement in its business profile.

The agency further said that a significant and sustained improvement in the revenue and profitability, maintaining increased proportion of higher margin businesses along with a reduction in the working capital cycle, maintaining a positive free cash flow while reducing the adjusted net leverage below 1.5x, all on a sustained basis, could lead to a positive rating action.

 

However, a decline in the revenue or profitability, a stretch in the working capital cycle, or a decline in the liquidity cushion, or any large debt-funded organic or inorganic capex, leading to the adjusted net leverage remaining above 2.5x, all on a sustained basis, could lead to a negative rating action.

Steel Strips Wheels manufactures steel wheel rims in the range of 10-to-30-inch diameter for PVs, utility vehicles, tractors, trucks, two wheelers, among others.

The scrip shed 0.52% to currently trade at Rs 209.50 on the BSE.

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