STEEL STRIPS INDIA

Steel Strips Wheels, established in 1991, manufactures steel wheel rims for varied segments of auto industry – passenger cars, multi utility vehicles (MUV), tractors, trucks, OTR vehicles and 2/3 wheelers. For Q3FY16, net sales was 3.19 million wheels, with net revenue of Rs. 281 crore and net profit of Rs. 15.52 crore, leading to net margin of 5.5% and EPS of Rs. 10.17. As on 31st December 2014, net worth was close to Rs. 440 crore and BVPS Rs. 288.

Its 9MFY16 performance was very good with net revenue of Rs. 873 crore and net profit of Rs. 42.7 crore. Its 9M EPS of Rs. 28 has already surpassed FY15’s full year EPS of Rs. 25.82. Net margins have also strengthened to 4.9% in 9MFY16, from 3.4% in FY15, on back of operating efficiencies and reduced debt levels.  Its gross debt stands at Rs.523 crore while cash and bank position is at Rs. 78 crore. Its net debt equity ratio has improved to 1.05:1 (30-9-15), from 1.46:1 (31-12-14), in a span of 9 months.

This stock was recommended in our Stock Recommendation section at Rs.326 with potential to touch 425 over the next 8-10 months, translating into 30% returns during this period.