SSWL reverses steel wheel narrative, adds Rs 150 cr capex
After years of calling steel a laggard and exiting Maruti business, management now says steel is growing and capacity is sold out, while capex jumps to Rs 600-650 cr.
What's new
- Steel wheel business now seen as growth driver after 15-year decline, with capacity expansion to 26 million units.
- Capex guidance increased to Rs 600-650 cr from Rs 460 cr, including new Rs 150 cr brownfield investment.
- Aluminum knuckle trial production delayed from Diwali 2026 to Q4 FY27 without clear explanation.
- Q1 FY27 revenue Rs 1,509 cr (up 27% YoY); EBITDA per wheel at Rs 314 vs Rs 262 prior year.
Themes from the call
Demand
Steel wheel demand is reviving post-GST cuts, with entire industry at sold-out levels; tractor cycle strong and alloy knuckles at 100% utilization.
Margins
EBITDA per wheel expanded to Rs 314, driven by input price pass-through, higher capacity utilisation, and favourable product mix; management sees upside bias.
Capital allocation
Capex raised to Rs 600-650 cr for Bhuj and Chandigarh expansions, funded through internal accruals and debt; next capex cycle not guided.
Guidance watch
- FY27 revenue growth targeted at 20%+ (approx Rs 6,500 cr).
- EBITDA per wheel guided above Rs 310 (FY26: Rs 262), but management will review after Q2.
- Bhuj alloy wheel and knuckle plants expected to begin trial production in Q4 FY27 with ramp to 80%+ utilisation by Q1 FY28.
- Export target of Rs 600 cr for FY27, with 20%+ ongoing growth post-tariff normalisation.
Risk flags
- Knuckle capacity timeline delayed by months without explanation, raising execution risk.
- Capex increase of ~40% not flagged in prior calls; the jump raises a question on capital allocation discipline.
- Steel wheel recovery narrative is a sharp reversal; sustainability of demand needs proof.
- Alloy wheel domestic pricing pressure persists; company avoids below-cost business but margin may compress.
Key quotes
-
"We deliberately left our business of Maruti for car wheels because the margin was too low to work for us."
— Dheeraj Garg, Jan 2026 call -
"Now we see that not only is aluminum growing, but steel is starting to grow as well... All the problems the steel industry had for 15-20 years have come to an end."
— Dheeraj Garg, Jun 2026 call -
"Our expansion in Bhuj has become extremely necessary. It is perfect timing because our order book is almost completely sold out."
— Dheeraj Garg, Q&A
The brief
Steel Strips Wheels executed a strong Q1, with 27% revenue growth and EBITDA per wheel hitting Rs 314, well above the guided Rs 310 floor. But the story is less about the numbers and more about the narrative flip. Six months ago, management described steel wheels as 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 Rs 150 cr on a brownfield expansion to push capacity to 26 million units. That is a complete reversal.
The capex jump — from Rs 460 cr to Rs 600-650 cr — adds to the credibility gap, especially since the new Rs 150 cr project was not mentioned in the prior call. The aluminium knuckle facility is also delayed from Diwali 2026 to Q4 FY27, with no detailed explanation. Management may be right about the structural turnaround in steel, but the whiplash in strategy and capital allocation will test trust.
The core business is strong. The alloy wheel segment maintains 35% of revenue, knuckles are sold out at 100% utilisation, and the tractor cycle looks durable. Exports are recovering as tariff normalisation levels the playing field at 10%. The 10-year vision — exports exceeding domestic — is ambitious but grounded in cost advantages. Execution on the Bhuj and Chandigarh expansions will determine whether the new narrative holds.
SSWL's new steel story has potential, but the flip-flops on strategy and capex demand proof, not just words.