Buy Steel Strips Wheels, target price Rs 965: Axis Securities

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Buy Steel Strips Wheels, target price Rs 965:  Axis Securities


Axis Securities has buy call on Steel Strips Wheels with a target price of Rs 965. The current market price of the company is Rs 896.45. Time period given by analyst is one year when its price can reach defined target.

Steel Strips Wheels, incorporated in the year 1985, is a small cap company (having a market cap of Rs 2804.72 Crore) operating in auto ancillaries sector.

Its key products/revenue segments include wheel rims, duty drawback, job work for the year ended March 31, 2021.




Financials

For the quarter ended June 30, 2022, the company has reported a standalone total income of Rs 1016.11 crore, down 4.92 per cent from last quarter total income of Rs 1068.74 crore and up 49.34 per cent from last year same quarter total income of Rs 680.40 crore. Company has reported net profit after tax of Rs 48.13 crore in latest quarter.

The company’s top management includes Mr. Rajender Kumar Garg, Ms. Deva Bharathi Reddy, Mr. Virander Kumar Arya, Mr. Ajit Singh Chatha, Mr. Shashi Bhushan cupta, Mr. Sanjay Surajprakash Sahni, Mr. Surinder Singh Vird, Mr. Sanjay Garg, Mr. Manohar Lal Jain, Mr. Andra Veetil Unnikrishnan, Mr. Dheeraj Garg, Mr. Siddharth Bansal. Company has AKR & Associates as its auditors. As on June 30, 2022, the company has a total of 3 crore shares outstanding.




Investment Rationale
SSWL is expected to be a beneficiary of the demand revival in the Auto segment, especially the CV, and Al-alloy wheel segment (which are all high-margin products).

The brokerage expects SSWL to outperform the industry growth given its sticky relations with OEMs across all auto segments viz. 2/3W, PV, CV, and tractors. It expects the company to report Revenue/EBITDA/PAT CAGR of15%/15%/21% over FY22-24E respectively.

The growth estimates are on account of operating leverage kicking in, backed by higher capacity utilization in light of the domestic auto-recovery.

Promoter/FII Holdings
Promoters held 62.6 per cent stake in the company as of June 30, 2022, while FIIs owned 0.07 per cent, DIIs 0.43 per cent.

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