52% Revenue Now From Europe! Why Analysts Think This Auto Ancillary Stock Can Rally Up to Rs 220 In 6-9 Months

Driven by an ongoing domestic recovery and growing export momentum, Steel Strips Wheels Ltd. has once again come into the limelight as analysts turn positive on the auto ancillary space. With the stock trading close to Rs 200, Axis Securities is positioning the company as a "Pick of the Week," supported by strategic capacity expansion over the next six to nine months and obvious earnings growth drivers.

Why Steel Strips Wheels?

• Domestic market recovery
• Strategic capex plans
• New growth vertical (Aluminium Knuckle)
• Target Price: Rs 220
• CMP as on 13th January, 2026: Rs 197
• Time horizon: 6-9 Months

Investment Rationale

As per the research analysts of Axis Securities, the following are the reasons to buy the shares of Steel Strips Wheels.

High-Margin Exports and Growth Trajectory: The company is expanding its presence in Europe, with the region's contribution rising from 32% in FY25 to 52% in H1FY26. Demand in Europe remains stable, supported by the ramp-up of aluminium wheel programs, two already launched and two more expected in Q4.

In contrast, the outlook for the US remains weak, and if the situation persists, SSWL could face an annual revenue impact of Rs 200 Cr. A tariff reduction to 28% (if the 25% penalty on Russian oil imports is lifted) could reopen negotiations with US customers.

Alloy Wheel Capacity Expansion: Alloy wheels have emerged as a key value driver, contributing 36% of total revenue in H1FY26. The company's alloy wheel capacity currently stands at 4.2 Mn units, with an expansion planned to 5.3 Mn units by FY26. Capex is focused on enhancing capability rather than expanding base capacity.

Furthermore, SSWL plans to invest Rs 88-90 Cr to add 1 Mn units of flow-formed wheel capability within existing infrastructure, leveraging advanced German technology for lightweight export applications.

Aluminium Knuckles - A New Growth Vertical: Aluminium knuckles generated Rs 33 Cr in revenue during H1FY26, with 1,24,000 units sold in the quarter. The company plans to scale capacity to 3 to 5 Lc units in FY26, backed by Rs 130 Cr capex, tapping into the growing electric and premium vehicle segments seeking improved fuel efficiency. Plans are underway to add another 0.5 Mn units, targeting a total 1 Mn unit capacity by Sep-Oct'26, which could generate peak revenues of Rs 240-270 Cr.

Steel Strips Wheels Outlook

"We estimate total wheel volumes at 2.05 Cr and 2.1 Cr units in FY26 and FY27, respectively, supported by an anticipated gradual recovery in the CV/tractor segment, a rising share of alloy wheels, higher exports, and the introduction of Aluminium Steering Knuckles. Accordingly, we estimate the company's Revenue/EBITDA/PAT to grow at 6%/8%/6% CAGR over FY25-FY28E," said the research analysts of Axis Securities.

Steel Strips Wheels Financials

The financial summary of Steel Strips Wheels highlights a steady improvement in the company's operating and profitability metrics from FY25A through FY27E, indicating a phase of consistent growth and improving efficiency. Net sales are projected to rise from Rs 4,877 crore in FY25A to Rs 5,241 crore by FY27E, reflecting a gradual but stable expansion in revenue base over the forecast period.

EBITDA jumped from Rs 496 crore in FY25A to Rs 610 crore in FY27E, indicating a stronger trend for operational performance. According to estimates, net profit would increase from Rs 184 crore in FY25A to Rs 266 crore by FY27E, indicating substantial earnings growth. As seen by the growing earnings per share (EPS), which is anticipated to rise from Rs 11.7 to Rs 17.0 over the same period, this growth promptly translates into better shareholder value.

Over time, rising appeal is shown by valuation indicators. EV/EBITDA is predicted to drop from 6.0x to 4.4x, while the price-to-earnings (P/E) ratio would contract from 17.1x in FY25A to 11.8x by FY27E. Similarly, although return on equity (RoE) rises from 10.7% in FY25A to 12.5% in FY27E, the price-to-book value (P/BV) ratio is predicted to fall from 1.8x to 1.4x. All things considered, the financial outlook indicates that the company is moving into a more robust period of growth and profitability, bolstered by growing margins, higher returns, and better valuation comfort.

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