Steel Strips Wheels Ltd Q4 FY2026 Concall Summary

Key Takeaways

• Record EBITDA, flat per-wheel economics: Q4 EBITDA hit a record INR 152.52 crores, but full-year EBITDA per wheel stayed flat at INR 262 as export declines and Chennai under-utilization offset premium-product gains.
• The steel wheel pricing pivot is real: After two decades of poor pricing, the company forced OEMs to accept increases; all new projects now carry solid margins, marking a structural shift in its legacy business.
• EV wheels are a near-monopoly growth engine: The company supplies ~80% of India's EV scooter wheels with proprietary technology no competitor has; May sales hit a record and demand outstrips supply by ~30%.
• Bhuj is the big bet, but the FY27 number is a black box: A ~INR 500 crore aluminum wheel and knuckle expansion starts trials in October, yet management refuses to speculate on FY27 revenue because OEM approvals are pending.
• What to watch next quarter: Whether the INR 80 crore manpower-linked sales loss in Q1 FY27 is fully recouped, the pace of export recovery toward the INR 600 crore target, and any concrete Bhuj customer approval timelines.

The Steel Wheel Turnaround

• Pricing power asserted: After two decades of poor pricing, management told its largest OEM that the pricing was unavailable anywhere in the world and refused to service them on those terms, winning a price increase.
• New projects, new margins: All new steel wheel projects are rolling out with solid margins, transforming what was the worst business in the portfolio into a contributor.
• Tractor strength: The tractor segment grew ~19%, providing consistent volumes all year with high value-added items that reduce cost of production.
• CV recovery: The CV segment grew ~10% despite a post-COVID low in Q2; demand recovered remarkably on structural factors including vehicle replacement and increased activity after GST cuts.
• Capacity utilization milestone: Management expects 95% utilization across all assets this year, which would be the first time in company history.

Garg: "I have mentioned that the business that was the worst in our portfolio, the steel wheel business, will take a turnaround. Because we have been able to, after two decades of very, very poor pricing, put our foot down to the OEM then said, 'Look, this pricing is not available anywhere in the world, and we will not service you on those numbers'."

EV Segment Dominance

• Near-monopoly position: The company is the #1 supplier of wheels for EV scooters and EV three-wheelers in India, with proprietary technology that no other Indian company possesses; all OEMs depend on them.
• Market share: Management claims almost 80% share in the EV scooter space, describing it as "almost a monopoly."
• Demand outstripping supply: The company could have sold 30% more last month if labor had been available; May recorded the highest-ever EV sales after manpower and structural issues were resolved.
• Full-year growth: Management expects 25% growth or more for the full year in the EV segment, possibly close to 40%, though caveated with "I could be terribly wrong here."
• Structural demand drivers: Improving quality, no pollution, low maintenance, and rising energy prices are all driving consumer preference away from ICE scooters.
• ICE two-wheeler deprioritized: The company is not focused on ICE two-wheelers because pricing is a problem; it is fighting for a price increase there.

Garg: "We are the number one supplier of wheels for EV scooters, EV three wheelers. We have a technology that nobody in India has. So, all the OEMs depend on us."

Bhuj Expansion: The Aluminum Bet

• Two projects, one site: The company is setting up aluminum wheel capacity (~0.12 crore wheels) and aluminum knuckle capacity (~0.11 crore) at the AMW facility in Bhuj, with capex of ~INR 500 crores.
• Timeline: Trial runs start October, culminating by January; OEM approvals expected thereafter, some earlier and some later.
• Revenue black box: Management explicitly declined to speculate on FY27 revenue from Bhuj because customer approvals are pending: "I wouldn't speculate on that revenue number because I myself am not sure about that."
• FY28 utilization target: Management is very confident of achieving 80% utilization of the new aluminum wheel capacity in FY28, and says almost 100% is possible next year if two major knuckle businesses are won and exports come through.
• Margin promise: Described qualitatively as "very nice margins" and "should be fantastic," driven by the premium aluminum segment, but no specific figure was given.
• Knuckle momentum: The company started making aluminum knuckles, added capacity to almost half a million, and expects much better utilization this year; it is the sole supplier for knuckles in the market and is exploring export traction with existing OEM customers.
• Phase II acceleration possible: Phase II of the knuckle project may need to be done faster than currently planned if two major business wins materialize.

Garg: "I wouldn't speculate on that revenue number because I myself am not sure about that."

Exports: Recovery After the Tariff Shock

• FY26 decline: Exports fell 19% due to Trump tariffs, costing roughly INR 108 crores in revenue and ~INR 15 crores in EBITDA.
• Tariff normalization: Tariffs are now similar across all nations, and demand from India has increased because of antidumping investigations against Southeast Asian competitors.
• Diversification underway: The company reduced dependency on the U.S. market, winning nominated projects in Europe, Latin America, and Asia over the last 18 months; ramp-up is happening this year.
• FY27 target: INR 600 crores in exports, described as a "very conservative number" and the second-highest ever, based on a rationalized tariff situation and a diversified portfolio.
• Manpower constraint: The company was unable to service export demand due to lack of manpower; things have only just started improving financially.

Margins & Cost Environment

• EBITDA per wheel trajectory: Q4 achieved INR 282 per wheel; the INR 300 target for FY27 is based on having already reached that level, after Q2 had destroyed profitability expectations.
• Full-year EBITDA guidance: Close to INR 650 crores for FY27, with a possible range of INR 650-750 crores going forward; FY28 projected at INR 700-750 crores.
• Raw material pass-through: Raw material costs are a pass-through regardless of conditions; after the Gulf war, pass-through now happens in the same month with no lag, versus a three-month lag previously.
• Cost recovery year: Steel prices, energy prices, and paint costs are all rising; management says the marketing department will be constantly recovering cost increases, calling this "the real strength of this company."
• Productivity levers: The company is working on automation, AI, and running assets at 95-100% utilization to control labor costs.
• Aluminum demand spike: A shortage in car facilities because aluminum has become expensive, plus shortages from other aluminum suppliers, has OEMs asking for steel wheels; management views this as likely temporary.

Garg: "This year is going to be a year when our marketing department will be constantly recovering -- the company's cost increases. This will be borne out, and this is what the real strength of this company would be. If you recover all our costs, increase volumes, then we're going to achieve what we promised you."

Manpower & Operational Risks

• Q1 FY27 sales loss: The company lost ~INR 80 crores of sales in Q1 FY27 due to lack of manpower; post May 20th, there is zero shortage.
• Market share gain: The company gained market share at the expense of competitors who could not resolve their own manpower issues.
• EV delivery previously blocked: Labor shortages in the past prevented EV wheel deliveries, but the team resolved both manpower and structural issues in May, achieving the highest EV sales ever.
• Export service gap: The company was unable to service export markets due to manpower constraints; this is only now beginning to improve financially.
• June momentum: Management stated that June should record the highest sales number ever.

Guidance & Commitments

Key Metrics