Metrics raised 1
- FY27 EBITDA per wheel target raised to >₹310 (from ₹300 initial guidance)
Event Participants
Executives
4 Aditya Dixit, Dheeraj Garg, Pranav Jain, Rahul Kumar
Analysts
9 Aditya Jhavar, Aditya Khetan, Ankur Kumar, Hitaindra Pradhan, Ksush Nahar, Madhur Rathi, Nishita Shanklesha, Saket Kapoor, Yash Jhurani
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹1,509 crores | +27% YoY; healthy momentum across alloy wheels, tractor and CV segments on improved domestic demand |
| Export Revenue | ₹127 crores | Tariff-disrupted YoY base; management cites ~37% QoQ recovery and June exports +7% YoY, first increase in 2 years; FY27 target ~₹600 crores |
| Alloy Wheel Share | 35% of revenue | Stable YoY; domestic market leadership; strongest growth driver for the company |
| Aluminium Knuckle Revenue | ~₹23 crores | Q1 revenue; currently at 100% utilization; FY27 guided at ₹110–130 crores, nearly 2x YoY |
| EBITDA (incl. Other Income) | ₹165.17 crores | +32% YoY; driven by OEM input price increases, operating leverage, favourable product mix |
| EBITDA per Wheel | ₹314 | vs ₹262 in Q1 FY26 (+20% YoY); above initial ₹300 guidance; FY27 target raised to >₹310 |
| EBITDA Margin | ~10.9% | +40 bps YoY; management prefers per-wheel EBITDA metric due to raw material price volatility |
| PAT | ₹71.51 crores | +43% YoY; PAT margin improved to 4.7% |
| Total Borrowings | ~₹826 crores | FY26 exit; interest cost 8–9%; additional factoring limits of ₹400–500 crores used for aluminium price surge |
| Capex (FY27E) | ~₹600 crores | ₹420 cr for Bhuj plants (1.2M alloy wheels + 0.6M knuckles), ₹80 cr replacement capex, ₹150 cr steel wheel brownfield (partial spillover to FY28) |
| Capacity Utilisation | >95% | Across all business units; management notes steel wheel industry is "absolutely sold out" |
Geographic & Segment Commentary
Alloy Wheels: Contributed 35% of Q1 revenue and remains the strongest growth driver, supported by rising OE fitment penetration and domestic leadership. Management notes domestic pricing is under pressure from competitors taking below-cost orders, but technical superiority commands premiums in select cases and export diversification reduces India dependence. Aluminium wheel capacity to reach ~6.2 million units annually post-Bhuj.
Aluminium Knuckles: Q1 revenue ~₹23 crores with 100% utilization on new customer awards beyond the initial Mahindra EV program. The Bhuj knuckles expansion (0.6M incremental to ~1.1M units) is almost completely sold out; FY27 revenue guided at ₹110–130 crores. Technical support from Arays positions the facility primarily for export and aftermarket business.
Tractor Wheels: Continued strong quarter on rural recovery, higher horsepower mechanization, healthy rural cash flows and replacement demand. GST-led price cuts have expanded farmer affordability; management sees a 10–15 year structural upcycle barring exceptional monsoon failures.
Commercial Vehicle Wheels: Gradual improvement from replacement demand, infrastructure-led investment and freight movement. A temporary demand blip occurred in June, but management expects buoyancy after the monsoons and a 3–5 year structural growth phase.
Exports: Q1 revenue of ₹127 crores declined YoY due to the US tariff disadvantage versus Vietnam and Thailand during FY26; tariffs have now stabilized at 10%, creating a level playing field. June exports grew 7% YoY — the first increase in two years — with recovery across Europe, Latin America and other geographies. FY27 export target is ~₹600 crores with 20%+ growth expected going forward.
Steel Wheels (Passenger Car & Agriculture): Unexpected resurgence — the industry is sold out of capacity after 15–20 years of decline. Passenger car steel wheel demand is growing >5%; a ₹150 crores brownfield expansion (up to 2M wheels, agri + fungible passenger car) will raise total steel capacity from 24M to 26M units, with commercialization before end of CY2026.
Company-Specific & Strategic Commentary
Bhuj Expansion & Arays Collaboration: ₹420 crores capex for a 1.2M alloy wheel plant and knuckles expansion; trial production expected in Q4 FY27. The order book is effectively sold out, mandating 80%+ utilization by Q1 FY28. Chinese partner Arays provides technical support, predominantly for the aftermarket/export-facing portion of the plant.
Pricing Power & Commodity Pass-through: Successfully secured OEM input price increases of 1–5%, adding >1% to margins; some increases are yet to flow. Aluminium is now settled monthly (vs quarterly previously) with a ~30-day lag, making the company "fully insulated" on both aluminium price upside and downside.
Export-led Global Ambition: Strategy to sell more wheels abroad than in India within 10 years, leveraging India's manufacturing base to become a dominant global aluminium wheel player. Non-US OEM awards are ramping up across geographies, reducing single-market dependence.
Steel Wheel Capacity Creation: Brownfield agri wheel line (fungible with passenger car steel wheels) near Chandigarh; commercialization before end of CY2026 with revenue visible in Q4 FY27. All business units are running above 95% utilization, a situation management says has not occurred in 30–40 years.
New Product Exploration: Hot stamping projects under discussion with existing OEM relationships; aluminium wheels and knuckles remain the primary growth pillars. Management is also investing in AI for labour productivity gains across manufacturing.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth (FY27) | 20%+ YoY; implied ~₹6,500 crores | Confidence from current run rate (~₹6,000 crores), quarterly growth and Bhuj ramp-up; changes visible from July numbers |
| EBITDA per Wheel (FY27) | >₹310 (from ₹262 in FY26) | Input price increases already realized; Q1 came in at ₹314 with an "upside bias"; review after Q2 |
| Export Revenue (FY27) | ~₹600 crores | Tariff headwinds stabilized at 10% level playing field; non-US OEM award ramp-up on track |
| Aluminium Knuckle Revenue (FY27) | ₹110–130 crores | Nearly 2x FY26; Bhuj knuckles capacity sold out; customer approvals expanding |
| Bhuj Capacity Ramp-up | Trial production Q4 FY27; 80%+ utilization by Q1 FY28 | Sold-out order book mandates rapid ramp-up; knuckles likely earlier than wheels |
| Steel Wheel Brownfield | Commissioning before end of CY2026; contribution from Q4 FY27 | Immediate demand visibility; industry capacity sold out; ~2M wheels added |
Risks & Constraints
| Risk | Context |
|---|---|
| West Asia Conflict & Geopolitics | Management cited the West Asia war as a key swing factor for commodity prices and demand; business has remained resilient so far, but further escalation could impact exports and margins. |
| Commodity Price Volatility | Aluminium price surge created ~₹150 crores of incremental working capital pressure. Monthly pass-through with 30-day lag and factoring limits of ₹400–500 crores mitigate, but sharp moves could still strain liquidity. |
| Tariff Policy Reversal | US tariffs have stabilized at 10%, but management acknowledges uncertainties are "not fully gone away"; any renewed differential versus Vietnam/Thailand could stall the export recovery. |
| Domestic Alloy Wheel Pricing | Competitors are taking orders at below-cost margins in the domestic market; SSWL refuses to match, but sustained irrational pricing could pressure domestic alloy margins and market share. |
| Capacity Constraints Pre-Bhuj | All business units are running >95% utilization with limited buffer; incremental demand cannot be serviced until Bhuj comes online in Q4 FY27/Q1 FY28, leaving no slack for project delays. |
| Monsoon & Rural Demand | Tractor/CV outlook is linked to monsoon performance; an exceptional bad monsoon could pause the 10–15 year tractor upcycle. The truck segment already showed a temporary June blip. |
Q&A Highlights
EBITDA per Wheel Trajectory
- Question: Q1 came in at ₹309–314 versus ₹300 guidance for FY27 — should we expect a gradual reduction over the next three quarters, or is guidance being raised? (Aditya Khetan, SMIFS Institutional Equities)
- Answer: All secured input price increases have now landed, adding >1% to margins and explaining the jump from ₹280 to ₹314. Treat ₹314 as a benchmark with an upside bias; management will review after Q2 and is optimistic about the current quarter. (Dheeraj Garg)
Export Decline, Tariffs and Recovery
- Question: Why did exports dip from ₹160 crores last quarter to ₹127 crores this quarter, given tariff uncertainty is behind us? (Aditya Khetan, SMIFS Institutional Equities)
- Answer: The YoY decline reflects the Trump tariff period when India was disadvantaged versus Vietnam and Thailand. Tariffs have now come down to 10% — a level playing field — and June exports grew 7% YoY, the first increase in two years, with ~37% QoQ recovery. No tariff headwinds are expected in the remaining three quarters, and non-US OEM award ramp-up supports the ~₹600 crore annual target. (Dheeraj Garg, Aditya Dixit)
Aluminium Knuckles Ramp-up
- Question: Knuckles revenue of ~₹23 crores is similar to Q3; only two customers for over a year — when will meaningful uptake come? (Aditya Khetan, SMIFS Institutional Equities)
- Answer: The business started with Mahindra's EV program, which saw market ups and downs; a second customer has since been added. With new awards, the business is running at 100% utilization and the Bhuj expansion is perfectly timed as the order book is almost completely sold out. (Dheeraj Garg)
Capex Program Breakup
- Question: What is the total capex program, how much is complete, and what is the business-wise breakup? (Aditya Khetan, SMIFS Institutional Equities)
- Answer: Bhuj capex is ~₹420 crores (1.2M alloy wheel capacity + 0.6M knuckles) plus ~₹80 crores of replacement capex. An additional ~₹150 crores will be spent on the agri wheel brownfield line, partially this year and partially next. Total FY27 capex is ~₹600 crores. (Pranav Jain, Dheeraj Garg)
Steel Wheel Expansion and Industry Dynamics
- Question: What product is the brownfield expansion for, and does steel wheel capacity go to 29 million? (Nishita Shanklesha, Sapphire Capital)
- Answer: The line makes agriculture wheels and is fungible with passenger car steel wheels; total steel capacity rises from 24M to 26M units. The steel wheel industry is sold out after 15–20 years of problems, and all business units are running above 95% utilization. Commercialization is targeted before end of CY2026, with results visible in Q4 FY27. (Dheeraj Garg)
Alloy Wheel Margin Sustainability vs Competition
- Question: Alloy wheel imports are rising and competitors are adding capacity — what gives confidence margins won't commoditize, and are orders won on price or capability? (Yash Jhurani, Qode Advisors)
- Answer: Only two serious players dominate the domestic aluminium wheel market; SSWL's technical superiority earns a premium in select cases. Export diversification reduces dependence on India. Competitors are taking below-cost orders, but SSWL will not burn cash; the strategy is global aluminium wheel dominance. (Dheeraj Garg)
Borrowings, Factoring and Aluminium Price Pressure
- Question: Borrowings are ~₹826 crores at 8–9%, so why is P&L interest higher at ~₹120–130 crores? (Aditya Jhavar, AK Investments)
- Answer: Additional factoring limits of ₹400–500 crores were utilized when funds were required. The aluminium price spike created ~₹150 crores of extra working capital pressure, which is passed on to customers but with a collection lag; the company ran a very tight ship at extreme aluminium prices. (Pranav Jain, Dheeraj Garg)
Bhuj Plant, Arays Technical Support and Export Profile
- Question: How is Chinese player Arays helping set up the Bhuj plant, and what will the facility's profile be? (Saket Kapoor, Kapoor & Company)
- Answer: Arays provides technical support; the Bhuj plant is predominantly for markets outside India, mainly aftermarket, with some capacity for OEM. Aftermarket wheels require different capabilities, which is where Arays' support is focused. Knuckles export traction is expected within 12–18 months as OEMs already know SSWL's capability from aluminium wheels. (Aditya Dixit)
FY27 Revenue Guidance and Capacity Ramp-up Timing
- Question: Earlier FY27 top line was guided at
₹6,500 crores (25% growth) — are we confident? When will new capacities reach optimum utilization? (Nishita Shanklesha, Sapphire Capital; Ksush Nahar, Electrum PMS) - Answer: The current run rate is ~₹6,000 crores with growth each quarter; Bhuj ramp-up will produce "a very different set of numbers," visible from July itself. New plants must run at least 80% in Q1 FY28 to service sold-out customer commitments, with knuckles likely ramping even earlier. (Dheeraj Garg)
Domestic CV/Tractor Blip and Sector Outlook
- Question: Is there concern on domestic CV and tractor growth, and will exports continue to improve? (Ankur Kumar, Alpha Capital)
- Answer: The truck blip was limited to last month; the market should be buoyant after the monsoons on replacement demand and infrastructure investment. Management sees a 3–5 year CV upcycle and a 10–15 year tractor boom post-GST price cuts; export lines were repurposed to make up for temporary domestic softness. (Dheeraj Garg)
Key Takeaway
Steel Strips Wheels delivered a healthy Q1 FY27 with revenue of ₹1,509 crores (+27% YoY), EBITDA of ₹165.17 crores (+32% YoY) and PAT of ₹71.51 crores (+43% YoY), driven by OEM input price increases, premium product mix and >95% utilization across plants. EBITDA per wheel rose 20% YoY to ₹314 — above the original ₹300 guidance and revised >₹310 FY27 target — with management seeing further upside. Exports, after two years of tariff-driven decline, showed their first growth in June (+7% YoY), supporting the ~₹600 crore export target and 20%+ topline growth guidance. Strategically, the ~₹600 crore capex program (Bhuj alloy wheels and knuckles plus a steel wheel brownfield line) carries a nearly sold-out order book, positioning the company toward global aluminium wheel leadership. Key watch points remain West Asia tensions, aluminium price volatility and below-cost pricing by domestic alloy competitors; the next milestone is Bhuj trial production in Q4 FY27, with full ramp-up targeted by Q1 FY28.