Mehabe score: 7 G Factor: 3 Piotski Score: 7 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 7.
Description
Company Overview
Steel Strips Wheels Ltd was incorporated in 1985 and started its operations in 1991. It designs, manufactures, and supplies Steel Wheel Rims and Alloy Wheels for a wide range of domestic and global automobile makers. It is Headquarter in Chandigarh. #
Main Points
Leader in automotive wheel rims
It is a leader in Designing, Manufacturing & Supplying automotive wheel rims – both under the steel & alloy category. #
It has a broad customer base, some of which are Tata Motors, BMW, Honda, Maruti Suzuki, and a few others #Site:SSWLMain Symbol:SSWL
Stock trades at 1073.0, above its 50dma 805.23. It also trades above its 200dma 673.09. The stock remains bullish on techicals
The 52 week high is at 1040.00 and the 52week low is at 393.30
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is expected to give good quarter
Weakness
– The company has delivered a poor sales growth of 8.26% over past five years.
– has a low return on equity of 7.65% for last 3 years.
-Promoters have pledged 45.03% of their holding.
-Dividend payout has been low at 4.64% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 32.8x. WABCO India trades at the industry’s max P/E of 133.61x. SSWL trades at a P/E of 12.1x
– Industry’s mean G-Factor is 3.8 while the mean Piotski score is 7.0. SSWL has a G-Factor of 3 and Piotski scoreof 7.
– Average 1 month return for industry is 6.6%. The max 1- month return was given by Steel Str. Wheel: a return of 43.02 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 678.0 cr compared to Rs 120.0 cr for period ended Jun 2020, a rise of 465.0%
Operating Profits reported at Rs 98.0 cr for period ended Jun 2021 vis-vis 2.0 for period ended Jun 2020 .
Operating Margins expanded 1278.8 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 32.72 compared to Rs 28.55 for previous quarter ended Mar 2021 and Rs -24.43 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2307.0 cr for period ended TTM vis-vis sales of Rs 1749.0 cr for the period ended Mar 2021, a healthy growth of 24.2%. The 3 year sales cagr stood at 4.2%.
Operating margins expanded to 13.0% for period ended TTM vis-vis 12.0% for period ended Mar 2021, expansion of 100.0 bps.
Net Profit reported at Rs 138.0 cr for period ended TTM vis-vis sales of Rs 49.0 cr for the period ended Mar 2021, rising 64.5%.
Company recorded a healthy Net Profit CAGR of 18.9% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 169.0 cr for period ended Mar 2021 vis-vis Rs 104.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 7.0% compared to 8.0% over the last 3 Years. – The stock has given a return of 145% on a 1 Year basis vis-vis a return of -5% over the last 3 Years. – The compounded sales growth on a TTM bassis is 90% vis-vis a compounded sales growth of 5% over the last 3 Years. – The compounded profit growth on a TTM basis is 571% vis-vis a compounded profit growth of -13% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 0.69% vis-vis 0.63% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 35.84% vis-vis 35.89% for Dec 2020
Conclusion
– has reduced debt.
– is expected to give good quarter – The company has delivered a poor sales growth of 8.26% over past five years.
– has a low return on equity of 7.65% for last 3 years.
-Promoters have pledged 45.03% of their holding.
-Dividend payout has been low at 4.64% of profits over last 3 years
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 805.23 and is trading at 1073.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
