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.