Steel Strips Wheels Ltd (SSWL) - Seems To Be Back On Track

SSWL designs and manufactures automotive steel wheels since 1991 and is among the leading supplier to Indian & Global Automobile Manufacturers. The product range comprises Steel wheels for Two and Three Wheelers, Passenger cars, Multi utility vehicles, Tractors, Trucks & OTR Vehicles.

SSWL have set up state-of-the-art facilities and deployed an optimized manufacturing process which ensures that the quality and reliability of the products are maintained for their lifetime.
With Technical Collaboration with Ring Techs Co Ltd. (a 100% subsidiary of Sumitomo Metals Ltd., Japan) , SSWL have achieved world class Technical excellence in Wheel manufacturing.
The State of Art facilities of SSWL caters to widest range of Domestic & Global Automobile customers demands with highest quality standards benchmarks.

Strategic Partners:
1) GS Global Corporation (GSGC), South Korea
2) Sumitomo Metal Industries Ltd (SMI), Japan
3) Tata Steel Ltd through Kalimati Investment Company Ltd (KICL), India  

Manufacturing Facilities:
1) Dappar, Punjab
2) Chennai, Tamil Nadu
3) Jamshedpur, Jharkhand (Under expansion)

Client List According To Segment:

1) Passenger Cars (Car wheel) : 
Maruti Suzuki, VW, Renault-Nissan, Mahindra & Mahindra, Tata Motors, Honda Motors and Hyundai Motors.  

2) Tractors (Tractor wheels) : 
New Holland, Mahindra & Mahindra, Tafe tractors, John Deere, Escorts, Sonalika Group 

3) Commercial Vehicles (Tube and Tubeless wheels) : 
Tata Motors, Daimler, Ashok Leyland, Ashok Leyland-Nissan and Swaraj Mazda. 

4) OTR (OTR Wheels) : 
JCB , Larsen & Toubro & BEML

5) Exports :
PSA Peugeot Citroen (France & Spain), BMW (UK, Germany & Netherland), VW/Audi (Germany & Argentina), Piaggio (Italy), Siam Kubota (Thailand and Japan), Kromag (Austria), Just (Germany) and SWTI (Slovakia), Renault Nissan Group, SSangyong Motors-Korea, CIR Merker-Italy.

Recent Updates (Past 2 Months):

1) SSWL Bags export order from ALCAR After-Market
http://www.bseindia.com/xml-data/corpfiling/AttachHis/Steel_Strips_Wheels_Ltd_070714.pdf

2) SSWL Bags export order from Russian After-Market 
http://www.bseindia.com/xml-data/corpfiling/AttachHis/Steel_Strips_Wheels_Ltd_230514.pdf

3) SSWL Bags Export Order of 1,50,000 wheels from Peugeot-France
http://www.bseindia.com/xml-data/corpfiling/AttachHis/Steel_Strips_Wheels_Ltd_080514.pdf

My Views:
The company faced 2 tough years off-late, after spectacular FY'11 and FY'12, but things seems to be back on track now, looking at the recent recognition and big orders, the company has received. The major risk company might face, as far as the stock price is concerned would be the very high debt, but that is because of nature of business, where they have to fulfill the orders received from the company. The Debt:Equity is close to 2.
I know many people today are considering high debt as a major factor for not investing in a particular company, but personally, I won't mind investing, if I like the company's prospectus, irrespective of their slightly higher debt, like we did with Granules India. If management is capable, they will repay it,  as the size of organization grows.
Nobody can guarantee this, but its about one's own belief in the company.
Another challenge the company might face could be on account of cancellation of orders, in testing times for the clients.

But still, with strong order book, I am expecting the company to grow at 20% CAGR in sales over next 3-4 years.
Economy, not just in India, but especially Europe, will be a decisive factor for their growth, as it has lots of major clients from Europe. If it does grow well over next few years, we could see a very strong re-rating on the counter.
Past year (FY'14), was absolutely flat for the company, with sales growing only 10% over FY13, and that too, because of superb performance in Q4, where they grew about 34% yoy.
Net profit has been flat to negative, in past 2 years. Current annual EPS is around 16, which makes the stock trading at a P/E ratio of 16, which is not too high, looking at the strong client-tele, the company is having.

Safe investors can avoid the stock, because of some negatives mentioned above, but investors having some risk apetite, may invest in the company, hoping for revival in economy.


Please understand the risk factors and other details, before investing in the company.