Axis Securities has upgraded its target price for Steel Strips Wheels to Rs 600, citing strong Q2FY27 performance where the company reported a 229% jump in adjusted profit. The brokerage highlights robust revenue growth and significant ongoing capex projects in Bhuj and Sambhaji Nagar as key drivers for long-term value creation.
Axis Securities Upgrades Steel Strips Wheels Target to Rs 600
Revenue: Rs 1,930 Cr (+61% YoY) | Adjusted PAT: Rs 117 Cr (+229% YoY)
Reader Takeaway: Strong operational efficiency and capacity expansion drive growth, though domestic auto demand weakness remains a key monitoring point.
What just happened
Axis Securities has maintained a 'BUY' rating on Steel Strips Wheels (SSWL) and significantly increased its target price to Rs 600. The revision follows a stellar Q2FY27 showing where the company beat analyst estimates across all major parameters, including revenue, EBITDA, and net profit. SSWL posted a 229% increase in adjusted PAT to Rs 117 crore, driven by a record EBITDA per wheel of Rs 404.
Why this matters
The company’s performance is being underpinned by a shift toward a premium product mix and operational efficiencies. The brokerage highlights that the company is effectively leveraging its expanded footprint, with the Bhuj facility adding 1.2 million units of aluminium wheel capacity. Furthermore, a new 1.1 million-unit aluminium knuckle facility is scheduled to begin production in Q4FY27, further strengthening the company's value-added product portfolio.
The backstory
SSWL has been aggressive with its capital expenditure to capture rising demand for advanced auto components. The firm is currently executing a Rs 1,400 crore greenfield project in Sambhaji Nagar, Aurangabad. This facility is designed to produce both aluminium and steel wheels, along with hot-stamped components, with a focus on high-level automation to improve productivity by at least 25% compared to existing plants.
Risks to watch
While the growth outlook is positive, investors should remain cautious regarding domestic auto sector demand, which could impact volume growth. Additionally, while the company employs price-adjustment mechanisms to handle raw material volatility, unexpected shifts in commodity costs could squeeze margins. Finally, any delays in the commercial ramp-up of the Bhuj and Sambhaji Nagar facilities would serve as a drag on projected earnings growth.
What to track next
The market will be watching the execution of the Sambhaji Nagar project and the ramp-up of the aluminium knuckle facility. Export performance also remains a major focus, with management targeting Rs 600 crore in FY27 export revenue, with potential upside of up to Rs 750 crore depending on US-India trade developments.