Steel Strips Wheels Limited — Q3 FY26 earnings call

Call held 30 Jan 2026

Management summary

Steel Strips Wheels Limited reported a robust Q3 FY26, with revenue growing 23% YoY to Rs. 1,321 crores and EBITDA up 8% YoY to Rs. 128 crores, primarily driven by strong domestic demand and premiumization. Despite challenges in the high-margin U.S. export market due to tariffs, the company saw significant growth in its aluminum and two-wheeler segments, alongside improved EBITDA per wheel. Management remains bullish on future growth, targeting Rs. 6,000 crores revenue for FY27, supported by ongoing capacity expansions and diversification efforts.

Highlights

  • Q3 FY26 Revenue stood at Rs. 1,321 crores, reflecting a growth of 23% YoY compared to Rs. 1,075 crores in the same period last year.

  • Q3 FY26 EBITDA came at Rs. 128 crores, a growth of 8% YoY compared to Rs. 118 crores in the same period last year.

  • Nine-month FY26 Revenue stood at Rs. 3,708 crores, reflecting a growth of 16% YoY compared to Rs. 3,195 crores last year.

  • The aluminum segment was a standout performer, contributing approximately 37% to the total revenue and 20% in volume terms.

  • EBITDA per wheel increased from Rs. 240 in the last quarter to Rs. 260 this quarter, demonstrating improved profitability.

  • Domestic segments (CV, tractor, aluminum wheels, 2-3 wheelers) showed strong performance and high capacity utilization.

Concerns

  • High-margin steel wheel export business to the U.S. was compromised by Rs. 300-400 crores due to tariff-related uncertainties.

  • EBITDA margins (percentage) appeared suppressed due to raw metal price increases, despite absolute EBITDA per wheel improving.

  • Management expressed concern that the market is not fully recognizing the company's strong performance, attributing it to past tariff impacts.

Key financials

3 periods

Headline

  • Aluminum Segment Revenue Contribution
    37%

Q3 FY26

  • Revenue
    ₹1,321 Cr
    YoY +23%
  • EBITDA
    ₹128 Cr
    YoY +8%
  • EBITDA per wheel
    ₹260

9M FY26

  • Revenue
    ₹3,708 Cr
    YoY +16%
  • PAT
    ₹138 Cr

What they filed

Q1 FY27: revenue up 27.2%, net profit up 44.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,095 1,075 1,234 1,187 1,201 +10%1,321 +23%1,475 +20%1,510 +27%
EBITDA120 118 135 122 112 −7%128 +8%149 +10%162 +33%
Net profit50 52 62 50 39 −22%49 −6%64 +3%72 +44%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹225 Cr Mix of debt and internal accruals
    • New facility for aluminum wheels and knuckles at Bhuj ₹420 Cr
    • Maintenance CAPEX ₹40 Cr
    • Small paint shop (next year) ₹10 Cr
    So the total expansion cost will be around Rs. 420 crores. We even had Rs. 40 crores for brownfield maintenance CAPEX... FY 2026 will be around Rs. 225 crores to Rs. 250 crores... It will be a mix of debt as well as our internal accruals... But you can say about Rs. 200 crores net debt would be added, perhaps less, around that number.
  • Debt Gross ₹900 Cr Cost 8%
    The total overall debt cost is around 8% to 8.5%, right? Average cost is this much... while your gross debt is Rs. 900 crores or so.

Guidance & targets

Capacity

  • Aluminum Knuckle Annual Capacity Capacity · by end of FY26 · High confidence 5 lakh units
    We are on the track to reach an annual capacity of 5 lakh units by the end of this year, with a planned scale-up to 11 lakh units next year.

    — Dheeraj Garg

  • Aluminum Knuckle Annual Capacity Capacity · FY27 · High confidence 11 lakh units

    — Dheeraj Garg

  • Aluminum Wheel Annualized Capacity Capacity · March · High confidence 5 million wheels
    We are hovering around 4.6 million, 4.7 million, but we will hopefully hit 5 million wheel annualized in the month of March.

    — Dheeraj Garg

  • Total Aluminum Wheel Capacity (with new plant) Capacity · post new plant · High confidence 6.2 million
    So, it will be 6.2 for aluminum wheels.

    — Dheeraj Garg

  • Total Knuckles Capacity (with new plant) Capacity · post new plant · High confidence 1.1 million
    And it will be 1.1 for knuckles.

    — Dheeraj Garg

Revenue

  • Peak Revenue from Bhuj (Aluminum Wheels) Revenue · peak · Medium confidence Rs. 600-700 crores
    The peak revenue would be about, let us say, Rs. 600 crores from the wheels business. Because we are doing a lot of value-add so you can take it close to Rs. 700 crores, or let us say Rs. 600 crores.

    — Dheeraj Garg

  • Peak Revenue from Bhuj (Knuckles) Revenue · peak · Medium confidence Rs. 200 crores
    And for the knuckles, it should be a business of, let us say, about Rs. 200 crores.

    — Dheeraj Garg

  • Revenue Revenue · FY27 · High confidence Rs. 6,000 crores
    So, next year we are looking at a turnover of Rs. 6,000crores easily. So that is very visible without the Trump tariffs getting over.

    — Dheeraj Garg

  • Revenue (with Trump tariffs over) Revenue · FY27 · Medium confidence Rs. 6,500 crores
    If the Trump tariffs get over, then we can hit Rs. 6,500 crores, because there is a lot of things that come into play.

    — Dheeraj Garg

  • Revenue Growth Revenue · FY27 · High confidence 0.20
    But clearly, we are looking at a 20% revenue growth next year.

    — Dheeraj Garg

  • Additional US Export Revenue Revenue · with tariff normalization · Medium confidence Rs. 500 crores
    then we can hit Rs. 500 crores additional revenue from America.

    — Dheeraj Garg

Capex

  • Aggregate CAPEX Capex · FY26 · Medium confidence Rs. 225-250 crores
    FY 2026 will be around Rs. 225 crores to Rs. 250 crores. Part of CAPEX spend will share for the next year.

    — Pranav Jain

Margin

  • EBITDA per wheel Margin · Q4 FY26 · High confidence Rs. 270
    So, I think Rs. 270 should not be far. We are hoping that in the fourth quarter we will hit Rs. 270.

    — Dheeraj Garg

  • EBITDA per wheel Margin · FY27 · High confidence better than Rs. 270
    And for the next year, I think we will come back with numbers to you, but they will be definitely better than Rs. 270.

    — Dheeraj Garg

  • EBITDA per wheel Margin · aspirational · Low confidence Rs. 300
    But I promise you that this Rs. 300 is also my dream. And we are very close to that dream.

    — Dheeraj Garg

Volume

  • Steel Segment Growth Drivers Volume · FY27 · Medium confidence 20% from tractors, trucks, and aluminum
    I think 20% majority of this growth is coming from tractors, trucks, and aluminum.

    — Dheeraj Garg

What to watch in Q4 FY26

EBITDA per wheel

Q4 FY26
Current Rs. 260
Target Rs. 270

Why it matters

This is a key profitability metric, and management has guided for a specific increase in the upcoming quarter.

So, I think Rs. 270 should not be far. We are hoping that in the fourth quarter we will hit Rs. 270.

Risks & concerns

  • US Tariffs on Steel Wheels Export

    high

    Impacted high-margin export segment, leading to Rs. 300-400 crores revenue loss, but actively diversifying to Europe and hoping for resolution.

    Management acknowledged

  • Competition in Aluminum Segment

    medium

    Margins are coming under pressure as the company grows in volume in the aluminum segment due to competition.

    Management acknowledged

  • Market Perception / Valuation

    medium

    Market sentiment is negatively impacted by past American tariffs, leading to a perceived undervaluation despite strong domestic performance.

    Analyst acknowledged

Q&A highlights

6 direct
Export realizations sustainability and raw material pass-through mechanism Direct
raw material is a pass-through. So every three months there is a change in aluminum prices that is set up by the customer based on the previous three months rates. So there is an absolute pass-through.

Clarifies the company's ability to pass on raw material price increases, ensuring margin stability despite commodity volatility.

Asked by Saurabh Jain

EBITDA margin percentage suppression despite higher value-add and top-line growth Direct
The question is that raw metal price increases invalidates this argument... The margin per wheel is what is more important to us. And the margin per wheel has gone up, from Rs. 240 in the last quarter, it has gone to Rs.260 this quarter, right?

Management emphasizes absolute EBITDA per wheel as the key profitability metric, explaining that percentage margins might appear lower due to higher raw material costs being passed on.

Asked by Saurabh Jain

MHCV market share decline from 61% to 52% YoY in Q3 Partial
I do not think for medium-heavy commercial vehicles, our share has gone down. I do not know why this projection has come to you... I will double-check this aspect.

Analyst highlights a significant reported market share drop, which management disputes and promises to verify, indicating a potential data discrepancy or concern regarding competitive positioning.

Asked by Vikas Sharda

Bhuj plant CAPEX, total capacity, and peak revenue projections Direct
So the capacity will be 1.2 million in the aluminum wheels and 0.6 million in the knuckles... The peak revenue would be about, let us say, Rs. 600 crores from the wheels business... And for the knuckles, it should be a business of, let us say, about Rs. 200 crores.

Provides specific capacity additions and revenue potential for the new Bhuj facility, which is crucial for future growth and valuation.

Asked by Nishita Shanklesha

Subpar Return on Capital (ROC) for CAPEX (Rs. 300 crores investment yielding Rs. 35 crores EBIT) Partial
No, no. I think we did our calculation on this, and we are getting our payback in seven years... Obviously, we are assuming a higher margin than Rs. 450. But on a conservative level, we said it is seven years.

Analyst challenges the efficiency of capital allocation, prompting management to defend the payback period and underlying margin assumptions for new investments.

Asked by Shashank Kanodia

PAT not growing in line with revenue (FY22 PAT Rs. 200 crores on Rs. 3,500 crores revenue vs. FY26 PAT Rs. 200 crores on Rs. 5,000 crores revenue) Direct
In 2022 there was an anomaly. There was a gain of one-time windfall gain of Rs. 60 crores from steel appreciation, so that is basically what has caused this confusion. But as you take that out, we are steadily growing.

Management clarifies that a one-time gain in the base year distorted PAT comparisons, reassuring investors about the underlying profit growth trend.

Asked by Shashank Kanodia

Market not recognizing the company's performance despite strong results Direct
Of course, we are concerned and wondering why cannot people read the good news. Everybody sold us off because the American tariffs happened. So, as a result, the sentiment just broke. But this is what we want to tell the participants in the market, that we have surpassed our best performance in spite of losing exports to the U.S.

Highlights management's frustration with market sentiment, attributing it to external factors (US tariffs) overshadowing strong domestic performance.

Asked by Shashank Kanodia

Steel wheels capacity curtailment and strategic use of Bhuj facilities Direct
So that capacity that you saw in the presentation included the facilities in Bhuj. And those facilities are now being sort of scrapped. And we are putting in newer factories there. So, obviously, that is how we curtailed the production of the projection, I mean, the capacity of our group for steel wheels.

Clarifies the strategic decision to replace older, less efficient facilities with new ones at Bhuj, explaining changes in steel wheel capacity projections and asset reallocation.

Asked by Anand Kulkarni

3 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview

Steel Strips Wheels Limited reported strong Q3 FY26 results, with revenue reaching Rs. 1,321 crores, marking a 23% year-on-year growth compared to Rs. 1,075 crores in the previous year. EBITDA for the quarter stood at Rs. 128 crores, an 8% increase from Rs. 118 crores in the same period last year. For the nine months of FY26, revenue was Rs. 3,708 crores, up 16% from Rs. 3,195 crores, and profit after tax was Rs. 138 crores. This performance was driven by robust domestic demand and record monthly sales in November and December.

Segmental Performance Highlights

The aluminum segment was a key performer, contributing approximately 37% to total revenue and 20% to volume. The aluminum knuckle segment is gaining momentum, with revenue already at Rs. 54 crores, and is on track to reach an annual capacity of 5 lakh units by the end of FY26, scaling up to 11 lakh units next year. The two- and three-wheeler business also delivered strong results, benefiting from GST 2.0 reforms and a strong festive season. The CV industry grew 16% year-on-year for the nine months, and the tractor segment showed a 12-13% growth rate.

Export Market Challenges and Diversification

The high-margin steel wheel export business to the U.S. was significantly impacted by tariff-related uncertainties, leading to a revenue compromise of Rs. 300-400 crores. To mitigate this, the company has diversified its export base, with Europe now accounting for over 58% of its export revenue. Management expects this diversified mix to remain intact and hopes for a resolution of the U.S. tariff situation within three to six months, which could bring an additional Rs. 500 crores in revenue from America.

Capacity Expansion and Capital Expenditure

The company is undertaking a total expansion cost of Rs. 420 crores for a new facility at Bhuj, which will add 1.2 million units of aluminum wheels and 0.6 million units of knuckles capacity. This expansion is being funded through a mix of debt and internal accruals, with an estimated addition of Rs. 200 crores in net debt. The aggregate CAPEX for FY26 is projected to be around Rs. 225-250 crores. The company strategically saved Rs. 100 crores in CAPEX at Bhuj by utilizing existing AMW factory buildings and land, and reallocated Rs. 100 crores worth of equipment from older facilities to other group plants like Jamshedpur and Chennai.

Profitability and Margin Management

Despite raw metal price increases, which are passed through to customers, the company's absolute EBITDA per wheel improved from Rs. 240 in the last quarter to Rs. 260 in Q3 FY26. Management clarified that while percentage margins might appear suppressed due to higher raw material costs, the focus is on absolute profitability per unit. They are confident of reaching Rs. 270 EBITDA per wheel in Q4 FY26 and expect further improvement in FY27, with an aspirational target of Rs. 300 per wheel.

Outlook and Future Growth

Management is bullish on maintaining business momentum, projecting a turnover of Rs. 6,000 crores for FY27, representing a 20% revenue growth. This could potentially increase to Rs. 6,500 crores if the U.S. tariff situation is resolved. Key domestic segments such as tractor, aluminum wheels, and commercial vehicles are expected to drive this growth. The company anticipates its aluminum wheel annualized capacity to reach 5 million units by March and expects commercial supplies from the new Bhuj facility to begin by December.

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