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Hidden Gem - Steel Strips Wheel Ltd (CMP: ₹ 230, Rating: BUY; Upside Potential: 22%)

ICICIdirect Research 05 Jun 2026 DISCLAIMER

Steel Strips Wheels Ltd. (SSWL), is an auto ancillary company involved in designing and manufacturing of automotive wheels - both steel and alloy wheels.
It has total production capacity of ~2.6 crore wheels per annum, including ~0.5 crore of alloy wheels.
As of FY26, it realised 36% of its sales from Alloy wheels while Steel wheels constituted 63% of sales.
SSWL counts all major domestic OEMs as its clients across vehicle categories namely CV, PV, 2-W, Tractors, etc.
SSWL operates in an oligopolist industry structure and is a sound proxy of underlying volume growth in the domestic auto space as well as greater export play. Demand prospects are steady in the steel wheel business while robust in the alloy wheel segment amid increasing penetration of SUVs and premiumisation trend underway in the PV space.
SSWL is presently executing an expansion in the alloy wheel space which will augment its capacity from 50 lakh units per annum to 62 lakh units per annum in FY27.
In the recent Concall, management guided for 15–20% PAT growth in FY27 and expects EBITDA per wheel to rise from ~₹260 levels in FY26 to ~₹300 in FY27. They indicated FY27 EBITDA could approach ₹650 crore. We however have built in conservative estimates with EBITDA/wheel expected at ₹ 275 & ₹ 285 for FY27E and 28E respectively.
We are positive on SSWL amid powertrain agnostic product profile (no EV risk), healthy volume growth visibility, increasing share of exports & alloy wheel in sales mix, consequent rise in margins & RoCE. We also drive comfort from its inexpensive valuations (~13x P/E, ~7x EV/EBITDA on FY28E), healthy b/s (0.5x debt: equity) & robust cash flow generation (CFO yield: 10%).
We have a BUY rating on SSWL with target price of ₹ 280 wherein we have valued the company at 16x PE on FY28E.

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