Current/ Expected Orderbook/ Pending Orders?

The management mentioned having an order book extending up to 2027, indicating strong visibility on future orders. They are focused on expanding markets beyond India and growing volumes consistently. The aluminum knuckles business, a new vertical since last year, has signed up with two OEMs and is expected to add extra revenues starting September. For alloy wheels, the company is gearing up for increased market share, including new model refreshes for Maruti with potential orders worth Rs. 45-50 crores. Capacity expansions are underway, including using equipment from AMW for new CV capacity in

Future growth expectations in earnings/operating earnings/profits/EPS?

Management targets approximately 10% topline growth for FY25, aiming for around Rs. 4,800 crores revenue. Key growth drivers include alloy wheels, exports, and tractor businesses growing by 10-12%, enhancing absolute per wheel margins. Steel wheel passenger business is expected to grow around 10.6% in volume and revenue. Tractor business projected to achieve 12% growth, supported by long-term agreements. EBITDA per wheel margins expected to improve due to price corrections and growth in higher-margin product segments. Debt levels anticipated to peak in FY24, with subsequent decline t

Any current/future new fundraising through debt or equity?

No new external debt borrowing is planned for the ongoing CAPEX of around Rs. 225 crores for the next year; this will be entirely funded from internal accruals. The current debt level of Rs. 1,048 crores (March 2024) is considered peak debt, with scheduled repayments of approximately Rs. 105 crores annually over the next three years. The company intends to repay debt naturally through scheduled repayments and prepayments as liquidity permits, aiming for a declining debt trend over time. No mention of any equity fundraising was made during the discussion. Overall, the management expects

Any current/future capex/capital investment/strategic investment?

Planned CAPEX for FY25 is around Rs. 225 crores, fully fundable through accruals without external borrowing. CAPEX includes alloy wheel expansion, knuckles, renewable energy projects, and flow forming equipment upgrades. New capacity being built in Punjab, near Maruti’s factory, marking entry into new business verticals. Equipment from AMW acquisition is being repurposed to add a new CV capacity line (approx. 400,000 wheels) at Jamshedpur. No intention to idle existing equipment from AMW; focus on efficient utilization. Future capacity expansions envisaged but timelines not firmly committed; a

Future growth expectations in sales/revenue/volumes?

Targeting ~10% growth in overall topline, aiming around Rs. 4,800 crores in the current financial year; potential to reach Rs. 5,000 crores if raw material and economic conditions improve. Domestic aluminum alloy wheels expected to grow about 10% annually, driven by market share gains and new model launches (e.g., multiple Maruti refreshers). Export revenues projected to grow about 10%, with a focus on aluminum alloy wheels and off-road vehicle wheels; aiming Rs. 700-720 crores in exports this year. Tractor business expected to grow by about 12%, supported by new long-term agreements.

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Steel Strips Wheels LtdQ1 FY24Auto Components

Steel Strips Wheels Ltd Q1 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹230P/E: 16.3Market Cap: ₹3.2K CrSector: Auto Components

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Targeting ~10% growth in overall topline, aiming around Rs. 4,800 crores in the current financial year; potential to reach Rs. 5,000 crores if raw material and economic conditions improve.
→Domestic aluminum alloy wheels expected to grow about 10% annually, driven by market share gains and new model launches (e.g., multiple Maruti refreshers).
→Export revenues projected to grow about 10%, with a focus on aluminum alloy wheels and off-road vehicle wheels; aiming Rs. 700-720 crores in exports this year.
→Tractor business expected to grow by about 12%, supported by new long-term agreements.
→Two-wheeler wheel segment targeting 16% growth, including EV wheels.
→Capacity utilization for alloy wheels projected to cross 4 million units next year (up from 3.3 million), aiming to fully utilize ~5 million capacity thereafter.
→Long-term growth driven by higher value-added products, expanded market share, and new product lines like aluminum knuckles.

Margin guidance

Category 3

→Management targets approximately 10% topline growth for FY25, aiming for around Rs. 4,800 crores revenue.
→Key growth drivers include alloy wheels, exports, and tractor businesses growing by 10-12%, enhancing absolute per wheel margins.
→Steel wheel passenger business is expected to grow around 10.6% in volume and revenue.
→Tractor business projected to achieve 12% growth, supported by long-term agreements.
→EBITDA per wheel margins expected to improve due to price corrections and growth in higher-margin product segments.
→Debt levels anticipated to peak in FY24, with subsequent decline through accrual-based repayments and limited CAPEX funding needs.
→The acquisition of AMW and introduction of aluminum knuckles add potential upside to earnings.
→Overall profit, EPS improvement expected as price adjustments and operational efficiencies materialize in 1Q FY25 and beyond.

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Fundraise plans

Yes

→No new external debt borrowing is planned for the ongoing CAPEX of around Rs. 225 crores for the next year; this will be entirely funded from internal accruals.
→The current debt level of Rs. 1,048 crores (March 2024) is considered peak debt, with scheduled repayments of approximately Rs. 105 crores annually over the next three years.
→The company intends to repay debt naturally through scheduled repayments and prepayments as liquidity permits, aiming for a declining debt trend over time.
→No mention of any equity fundraising was made during the discussion.
→Overall, the management expects debt levels to reduce going forward, with capital expenditure funded internally and no immediate plans for fresh debt or equity issuance.

Order book

Yes

→The management mentioned having an order book extending up to 2027, indicating strong visibility on future orders.
→They are focused on expanding markets beyond India and growing volumes consistently.
→The aluminum knuckles business, a new vertical since last year, has signed up with two OEMs and is expected to add extra revenues starting September.
→For alloy wheels, the company is gearing up for increased market share, including new model refreshes for Maruti with potential orders worth Rs. 45-50 crores.
→Capacity expansions are underway, including using equipment from AMW for new CV capacity in Jamshedpur, indicating readiness to cater to increased demand.
→While no exact total orderbook value was disclosed, the sustained capacity expansions and multi-year order visibility underline a healthy pending order pipeline.

Capex plans

Yes

→Planned CAPEX for FY25 is around Rs. 225 crores, fully fundable through accruals without external borrowing.
→CAPEX includes alloy wheel expansion, knuckles, renewable energy projects, and flow forming equipment upgrades.
→New capacity being built in Punjab, near Maruti’s factory, marking entry into new business verticals.
→Equipment from AMW acquisition is being repurposed to add a new CV capacity line (approx. 400,000 wheels) at Jamshedpur.
→No intention to idle existing equipment from AMW; focus on efficient utilization.
→Future capacity expansions envisaged but timelines not firmly committed; aiming for phased increases, including possibly doubling alloy wheel capacity over time.
→Strategic emphasis on aluminum knuckles—India's first producer—targeting SUV segment with pricing power.
→Commitment to maintaining and optimizing engineering and demand generation to support growth plans.

How does Steel Strips Wheels Ltd rank vs peers in Auto Components?

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Rev 3Mar 3

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