Steel Strips Wheels: strong Q1, steel turnaround, and a ₹150 cr credibility gap
Q1 profit jumps 43% but management’s steel wheel reversal and unannounced capex raise questions on capital allocation.
The numbers
- Standalone net profit up 43% YoY to ₹71.5 cr on revenue of ₹1,510 cr (up 27%).
- Consolidated net profit up 47% to ₹69.5 cr, reversing a trailing PAT growth of just 0.2%.
- EBITDA per wheel hit ₹314, above the guided ₹310 floor.
- Capex guidance raised to ₹600-650 cr, including a previously unmentioned ₹150 cr brownfield expansion.
Management's story
- Management now says steel wheel demand is reviving, capacity is sold out, and the industry’s 15-20 year problems have ended.
- FY27 revenue growth targeted at 20%+ (approx ₹6,500 cr).
- Export target of ₹600 cr for FY27, with 20%+ ongoing growth post-tariff normalisation.
- Alloy knuckles at 100% utilisation; tractor cycle durable; knuckle plant delayed to Q4 FY27.
“All the problems the steel industry had for 15-20 years have come to an end.”
— Dheeraj Garg, Jun 2026 call
Where they diverge
The numbers deliver a strong Q1, but the narrative flip on steel wheels and the unannounced ₹150 cr capex create a divergence between stated strategy and recent actions. Six months ago, management said they deliberately exited Maruti steel wheel business due to low margins. Now they claim steel is growing and capacity is sold out. The ₹150 cr whitefield expansion was not flagged in prior calls, and total capex jumped 40% without prior guidance. The strong EBITDA per wheel supports optimism, but the whiplash in strategy and capital allocation demands proof of execution.
The full read
Steel Strips Wheels delivered a strong Q1: net profit up 43% to ₹71.5 cr, revenue up 27% to ₹1,510 cr, and EBITDA per wheel at ₹314, above the guided floor. The result puts the ₹650 cr EBITDA target for FY27 on solid footing. But the call’s real story is a strategic reversal. Six months ago, management said steel wheels were a low-margin business they deliberately exited, including the Maruti account. Now, steel is a growth driver, capacity is sold out, and the company is spending ₹150 cr on a brownfield expansion to push capacity to 26 million units. That is a complete flip. Capex jumped to ₹600-650 cr from ₹460 cr, with no prior warning. The knuckle facility is delayed to Q4 FY27 without clear explanation. The numbers are clean, but the whiplash in strategy and capital allocation will test trust. Execution on Bhuj and Chandigarh will determine whether the new narrative holds.
What we're watching
- Knuckle plant timeline: trial production in Q4 FY27, ramp to 80%+ by Q1 FY28.
- EBITDA per wheel guidance review after Q2; current floor is ₹310.
- Bhuj alloy wheel and knuckle readiness as order books are sold out.
- Export trajectory: ₹600 cr target for FY27; tariff normalisation at 10% is a tailwind.