SSWL has bagged exports order for supply of Steel wheels for Egyptian passenger car market. This order covers supplies of around 32,500 steel wheels. These wheels will be shipped from the company’s Dapper Plant from next month onwards. This order will strengthen the company’s position as a strong player in this region. It would also improve the company’s order book and would provide revenue visibility for next couple of years.
SSWL has already established itself as a leading supplier of caravan Steel wheels in the European region. The company is in an advanced stage of discussions to finalize long-term contracts with European customers and expects to close them by early next year. It has already marked its entry in the high potential Truck and Trailer Steel wheels market in EU and aims to strengthen it in near future.
Major growth drivers for SSWL going forward are the brown-field CV expansion in Chennai in addition to the new alloy wheel plant in Mehsana, Gujarat. Being high margin segments it is expected to improve the average blended realizations. SSWL is well positioned in the industry owing to its increasing market share, strong entry barriers in wheels manufacturing, sticky clientele, backward integration plant, expansion of CV base in Chennai and foray into alloy wheels segment. The stock trades at 14x FY19E earnings. We have a positive outlook on the stock.
Steel Strips Wheels Ltd is currently trading at Rs1,076.05, up by Rs25.65 or 2.44% from its previous closing of Rs1,050.4 on the BSE.
The scrip opened at Rs1,075 and has touched a high and low of Rs1,083.95 and Rs1,054.95, respectively.
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