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SENSEX: 31109.28 81.07

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Multi Baggers

Hem Securities

12.00 AM Aug 8th 2016

Steel Str Wheel

BSE ID : 513262     NSE ID : SSWL

RECOMMENDED PRICE 511.80

PEAK FROM RECO 952.90 86.19%

CURRENT PRICE 845.00 65.10%

SSWL Designs & manufacture automotive steel wheels since 1991 and is among the leading supplier to Indian & Global Automobile Manufacturers. We initiate a 'BUY' on the stock with a target price of Rs 640 with the medium to long term investment horizon.

Steel Strips Wheels

SSWL is a part of the Steel Strips Group, headquartered in Chandigarh. It is engaged in the manufacturing of single piece steel wheel rims for scooters, passenger cars, utility vehicles and tractors. It supplies rims to almost all major manufacturers of two wheelers, three wheelers, four wheelers, tractors and heavy commercial vehicle. SSWL has strong market share in all segments. It captures 50% in passenger car, 38% in Tractors, 40% in Commercial Vehicles and a lion share of 70% in OTR.

The company has registered decent results for the quarter ending June 2016. The standalone revenues grew by 11.23% to Rs.325.40 crores vs. Rs.292.54 cr. in the year ago quarter. Operating profit grew at Rs.43.14 crores as against Rs.32.56 crores in the corresponding quarter last year; representing growth of 32.5%. The adjusted net profit surged sharply at Rs.18.59 crore as against Rs.12.15 crore, depicting a sharp growth of 53% y-o-y.

SSWL has achieved highest ever monthly sale of wheel rim in July 2016 at 12.63 lakhs vs 11.65 lakhs; representing a 8.4% y-o-y growth. The company expects to clock record second quarter to reach 38 lakhs wheels vs 33.68 wheels y-o-y indicating close to 13% volume growth for Q2. The passenger car segment grew 3% y-o-y, 2&3 wheelers grew sharp at 35%, Truck sales muted by 7%, tractor wheels grew 9% and exports degrew by mere 1.7%.

SSWL has been a continuous and prestigious winner of orders of wheels from across the domestic and global automobiles companies.

Valuation

With strong and continuous order flow, cost saving initiatives, improving capacity utilizations, volume growth, technical collaborations and benefit of upcoming Alloy wheel plant; SSWL growth trajectory is visible. We believe the company is trading at an attractive valuation at 10.13x and 8.27x of standalone FY17EPS of Rs.50.54 and FY18EPS of Rs.61.88. We initiate a ‘BUY’ on the stock with a target price of Rs.640 (appreciation of about 25%) with the medium to long term investment horizon.

For full details, Click on the attachment.

Disclosure of Interest Statement - Company Name

1. Analyst Ownership of the Stock - No

2. Hem & its Group Company Ownership of the Stock - Yes

3. Hem & its Group Companies’ Director Ownership of the Stock - Yes

4. Broking relationship with company covered - No

Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification: The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

SSWL_HemSec_PYT.pdf

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