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Target: ₹240
CMP: ₹211.95
Steel Strips Wheels Ltd (SSWL) reported a mixed set of numbers for Q1FY24. Revenue stood at ₹1,044 crore (up three per cent/ four per cent year on year/quarter on quarter), a slight two per cent beat on estimates, which was mainly led by higher overall volumes (partially offset by lower ASP due to softening in commodity prices).
SSWL reported EBITDA of ₹113 crore (up three per cent/ four per cent year on year/quarter on quarter), which stood in line with our estimates (despite a higher topline).
The company’s PAT stood at ₹47 crore (down one per cent year on year but flat quarter on quarter). This was a 10 per cent miss from our estimates which was largely on account of an increase in interest costs.
We now factor in higher volumes in FY24/25 at 19.9 million and 22.6 million units respectively. This is on account of an expansion of the company’s alloy wheel capacity as well as more clarity on the AMW ramp-up.
With alloy wheels and exports share increasing, we revise our EBITDA upwards for FY24/25 by three per cent/14 per cent respectively. We forecast revenue/EBITDA/PAT growth of 17 per cent/25 per cent/43 per cent CAGR over FY23-25.
We maintain our BUY rating on the stock with a revised TP of ₹240/share (from ₹165/share earlier).
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