SSWL Rallies over the Order for EU Trailer Market

After the company declared that it had bagged an export order for the supply of Caravan Steel wheels for EU Trailer market, SSWL share price has moved up to its new lifetime high of Rs 748, up 6.5% on the National Stock Exchange (NSE).

Total order is for supplying approximately 115,000 wheels over a period of six months. Orders will be carried out from the Chennai plant of SSWL with the shipments starting from November 2016.

This order signifies the strong presence of SSWL in the tremendously competitive EU Caravan wheels market complimenting the strategy that was formulated a year back. The company is anticipating receiving additional orders for the Caravan wheels from other EU customers in coming weeks.

At 2:30 pm, SSWL share price was trading at Rs. 740.50 with the rise of 5.55%.

So far in October, the stock outperformed the market by rising 29% after the company declared that it had achieved 11% year on year growth in its total wheel rim sales to 1.21 million in September 2016 in comparison to 1.09 million in September 2015. The Nifty50 Index gained 1.26% in last six trading sessions.

SSWL said that the tractor and passenger segment performed extremely well and expected to trend the same path in the third quarter of 2016-17.

Recently, on July 20th, SSWL share price had rallied over the company bagging yet another order from Mobius Motors, a Kenyan company. Under this order, the company marked its entry in the East Africa by promising to develop 150,000 ground wheels of 16” for Mobius Motors over a spread of five years. The cumulative revenue that will be generated in this particular project will amount to USD 2.4 million. SSWL is also supplying wheels to Morocco and Egypt.

SSWL is the multibagger pick of the month by Dynamic Levels. For the details on the stock, visit SSWL share price history page of Dynamic Levels website.

SSWL – “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 company’s 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 company’s 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

 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

SSWL Dances to the Tune of Greener Market

The Auto Ancillary and component maker SSWL has been dancing to the tune of the greener market. SSWL share price went overboard rising around 12% in today’s trade. The stock opened at Rs. 519 after its previous close of Rs.507.25. The opening price of the stock remained was its intraday low. SSWL share price traded at a new high of Rs. 571 in today’s trade. So far, 1,94,127 shares of SSWL were traded on NSE window, while its average volume for 20 days stands at 45,730 shares.

SSWL has the PE of 11.75 with the promoter’s holding pledge of 5.54 and the debt ratio of 1.14. SSWL share price has gained since Brexit and Budget. The gain after Brexit stands at 18.46% while that after the budget is 71.34%.

SSWL had reported a flat operating profit at PAT for the quarter ending June 30th, 2016. The company also reported a little rise in its total expenditure and total income resulting in the flat net profit. The earnings per share presented by the company were also without much change.

From among the 1.55 crores of shares floated by the company, Indian promoters hold the biggest chunk of 59.01%. The institutions own 0.55% while the non-institutions hold 40.43% of shares. Among the promoter’s Dheeraj Garg owns 30% of the shares, Malwa Chemex Udyog holds 2.49% stakes, Priya Garg holds 2.45%, DHG marketing has 2.36%, and RK Garg holds 1.89% stakes in the company. Sumitomo Metals (5.49%), Bloomen Flora (3.16%) and Kalink (1.35%) are the non-promoter stakeholders.

Currently, SSWL share price was trading at Rs. 566.45. SSWL is the month’s multibagger picked by Dynamic Levels. For more details on the stock, visit SSWL share price history and SSWL share price forecast page of Dynamic Levels website.