Management has guided for debt reduction. Pledging is coming down. Good quarter result inspite of lockdown restrictions.
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Latest management interview above.
Regards,
Raj
Disc: Invested
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Their Q1 EPS was more than their FY21 EPS ! Their order book for the year is full. Also they are looking to acquire company in NCLT to increase exports and get close to being No. 1 in steel wheels.
New order announcement today and indication of more to come in filing below
Disc: Invested
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Link to their latest presentation (includes slides with projections for FY 21-22)
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Latest Management interview upping the guidance.
Disc: Invested
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Another 300Cr+ monthly sales from SSWL.
Disc: Invested
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Stock split approved. Company going for a face value of Rs. 5. Announcement below:
Company is going for a physical AGM on 30th September in their head office. I would have loved to attend it if it would have been by VC.
Regards,
Raj
Disc: Invested
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Interesting developments. The NCLT acquisition is finally out.
The website (AMW Autocomponent) of the target company mentions that it has 13.3mn wheel rim capacity. SSWL has 20+mn capacity as per the investor presentation.
“AMW Auto Component reported a revenue of Rs332.6 crore in 2015-16, against Rs264.9 crore in the previous year, data from RoC filings show. In 2015-16, it reported a loss of Rs47 crore, as compared to a profit of Rs72 lakh in the previous financial year” (AMW Auto Component’s lenders, led by IDBI Bank, seek to sell the firm)
That’s 60% increase in capacity. Now if any forum member can educate - if the plan is approved by CoC - how much time does it take for the takeover to happen?
EDIT - So I read a little and approval by CoC is the second last step. Now the plan will be presented before NCLT for approval and if the nod is received - then voila. Legal process is done. SSWL transfers money to creditors and takes over the Company.
Now to look forward to Company’s guidance on how the capacity utilisation at this NCLT company would be ramped up and whether this will remain as a wholly owned subsidiary or will be merged eventually.
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Another 300Cr sale for SSWL…
Regards,
Raj
Disc: Invested
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Few points noted from the latest credit rating report
- The company’s foray into the export market has resulted in increased order inflows with its contribution supporting sales in 1QFY22, at a time when domestic OEM demand was adversely affected. Exports contributed to around 26% of the revenue in 1QFY22 (FY21: 15%; FY20: 14%).
- The agency expects EBITDA margins to expand to 12%-12.5% in FY22 (FY21: 11.6%; FY20: 11%) due to higher sales from margin-accretive passenger vehicle (PV) alloy wheel rim and export segments, in addition to improved operating leverage.
- SSWL’s promoter had pledged 29% (June 2021: 37.1%, March 2021: 45.0%, March 2020: 49.9%) of the total shares held for the loans taken and support extended to Indian Acrylics Limited (owned by SSWL’s promoters) for capex.
- Tata Steel and Sumitomo Metal Industries Ltd, are strategic investors in the company, with a stake of 6.97% and 5.45%, respectively, as of June 2021
- SSWL has healthy market share of 50% in PV, 53% in medium and heavy commercial vehicles, 44% in tractors, 70% in off the road segment, and 30% in two and three-wheelers.
- SSWL has undertaken capex at its Mehsana alloy wheel plant to double the capacity by 3QFY22 in light of strong OEM demand and new export orders.
Disc : Invested
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Steel strips and wheels#SSWL
Very very good Q2FY22
Record q2fy22
Superb cash flows
Rev at 961cr vs 410cr
Pbt at 97cr vs 15.5cr
Q1 PBT at 63cr
Almost 50% up QoQ
6.1x YoY
PAT at 63cr vs 14cr
Higher taxes
Ocf at 175cr vs 15.5cr:ok_hand:
Nov 22nd-record date for stock split pic.twitter.com/wg91fxYTwQ
— Shreenidhi P (@nid_rockz) October 22, 2021
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I believe the next re-rating would kick in once a large domestic or foreign fund house invest into the company. It is clear that Tata Steel and Sumitomo are invested due to strategic reasons. If you have a look at the shareholding as at end of September 2021, you dont see any Indian or global fund house in the list holding more than 1%. This can change if the management opens up to shareholders via quarterly con-calls and start participating in investor meets. If you have noticed, they have not given any status update in current quarters result about the acquisition of AMW Autocomponent Limited as well, which is unfortunate.
While the company has been doing a good job in-terms of disclosing significant order wins and monthly sales updates via updates to exchanges, they have stayed away from con-calls and investor meets - investors need predictability in terms of numbers and clarity on the strategic direction in which the company is heading. Hope management look into this aspect and get it fixed.
AJ
Disclosure: Invested from 2017 and added during last quarter.
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SSWL bags another order worth 12mn USD and says that these orders will be executed till end of Jan 2022. Expect a favourable mix in coming quarters due to higher exports and exports having higher aluminium alloy share.
Also can anyone throw light on whether these orders are due to shifting of supply chain from other locations or whether there are competitive advantages (tech, low cost, any other?) that SSWL enjoys?
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This order flow will continue as customers already tasted their products in export front…More over less defects in products compare to other wheel exporters.
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The existing capacity and newly added capacity on alloy wheels…will arguments well for growth for next 2 years…
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Concern is debt…but in CNBC interview MD told…planning to pay off everything by June or July 2022 time frame…that will be huge trigger
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It is capitol expensive business…so return ratios we can not expect more than 15% or Max 20 %…
Correct me if I am wrong
One of the main points which has worked in favour of companies like Steel Strip Wheel is that after many years, Raw material cost (Steel, Aluminium) is lower in India as compared to China.
Here is a link to an interview by JPM on CNBC.
There are multiple reasons for lower RM price in India vs China such as
- Withdrawal / reduction of export subsidy by China on Steel
- Strict directions and actions by Chinese regulators on provinces not meeting pollution targets - which has resulted in output cuts of steel and alumimium
- China becoming a net importer of these metals due to above points.
SSWL has become a beneficiary of above which puts the company in an advantageous position in quoting for orders. Since the nature of the Industry is that the OEM generally sticks to the vendor for the same model - one can expect similar order flow as long as the end user demand for the automotive model remains in-tact.
Disc - Invested
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Recently they announced latest tieup with existing partner Tata long products to supply 5000MT long bars for 3 yrs period.
So with this SSWL mgmt so confident of maintaining existing orders and incremental growth…
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Release of pledge. So far - Sales increasing, getting new orders, release of pledge, capex (50% increase) through NCLT acquisition, long term orders with RM pass through and higher Al share. Ticking the right boxes. ASM 4 holding it back.
D - Invested. Biased.
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Few queries:
1/ what are the chances that they will be successful with acquisition?
2/ how likely the co is going to benefit from EV transition? Are alloy wheels used more in EVs?
3/ As major competition for the co is from China so are they getting any visible benefits from China + 1 shift?
Thanks