SSWL - Steel Strips & Wheels Ltd Share Price

Steel Strips Wheels Limited's management provided a positive outlook for the company during the Q4 FY '25 Earnings Conference Call held on May 16, 2025. Key highlights include a record quarterly revenue of INR 1,233 crores, up 15.5% year-on-year from INR 1,068.7 crores. EBITDA grew by 21% to INR 134.5 crores, while profit before tax increased by 22.5% to INR 83 crores. The net profit slightly rose to INR 61.7 crores from INR 60.4 crores due to a transition to a new tax regime, which affected previous quarters.

For the fiscal year 2025, total revenue reached INR 4,429 crores, reflecting a modest growth of 1.7%. EBITDA stood at INR 486.8 crores, a 4.6% increase, with improved margins reaching 11% from 10.7%. Notably, the company reduced its debt by INR 193 crores despite capital expansions in aluminum wheels and knuckles.

Management expressed optimism about future growth, forecasting a 15% increase in sales for FY '26, with potential for double-digit growth in subsequent years. The alloy wheels segment generated INR 1,436.5 crores in revenue, and the company anticipates a 10% growth. They aim to reach export revenues of INR 1,000 crores in FY '26, driven by improved demand from international markets as competition in Europe shrinks.

Management highlighted that the EBITDA per wheel rose from INR 253 to INR 261 year-on-year, indicating a stable cost structure. They expect ongoing improvement in margins, especially in the legacy contracts segment and as they expand their presence in the aluminum knuckles market, which they believe can yield strong returns in the coming years.

Here are the major questions and detailed answers provided during the Q&A section of the Steel Strips Wheels Limited earnings conference call:

1. Question by Gautam Rajesh:
"Are you seeing any changes in demand scenario in exports with duties imposed on China being higher than that of India? Is that resulting in better traction for you?"
Answer:
Yes, I believe we're seeing a notable advantage. With India's reciprocal duty at 10%, compared to 36% and 46% for Vietnam and Thailand, our market share is increasing. Customers are shifting to us due to these higher duties anticipated for our competitors. Additionally, we foresee robust traction in Europe, especially as some of our competitors face financial difficulties. Our export target for the next financial year is around INR1,000 crores.

2. Question by Gautam Rajesh:
"Is the EBITDA margin revision from the legacy contracts largely done? What margin profile do you expect going ahead?"
Answer:
We've seen our EBITDA per wheel improve from INR253 to INR261, with Q4 at INR270. I expect this to be the new norm and anticipate progressive growth to above INR270 in the latter half of the fiscal year. For overall margins, I foresee healthy growth without giving specific numbers but assure you of improvement.

3. Question by Saurabh Jain:
"Given the opportunities in exports and alloy wheels, can we expect double-digit growth in the coming years?"
Answer:
Absolutely. We're forecasting at least 15% growth this year, with the potential for 20-25% in subsequent years. The CV segment's recent performance has been promising, and we're gaining traction across various sectors.

4. Question by Saurabh Jain:
"With gross margins showing contraction, what are your expectations for gross margins going forward?"
Answer:
Margins fluctuate with aluminum prices, but we've managed to secure competitive contracts. While we expect slight margin increases this year, margins won't match their peak levels from previous years but will contribute to our growth.

5. Question by Ritesh Gandhi:
"As the industry shifts from steel to alloy wheels, how do you foresee our overall market share?"
Answer:
We are indeed benefitting from this shift, as the growth in our aluminum business offsets any declines in steel. We expect to maintain or even gain market share despite the higher competition in the alloy market.

6. Question by Ankur:
"Was the remuneration of the MD linked to sales percentage?"
Answer:
No, that's incorrect. The remuneration has never been linked to sales figures, as it is not legally permissible.

These summaries encapsulate the major inquiries and insights shared during the conference, focusing on strategic growth, market dynamics, and financial expectations.