Steel Strips Wheels Ltd: Navigating Tariffs, Driving Domestic Growth in Q3 & 9M FY26

Steel Strips Wheels Limited (SSWL), a prominent player in the automotive wheel manufacturing sector, has reported a resilient performance for Q3 and the nine-month period of FY26, primarily driven by robust domestic demand and strategic diversification. The company announced a 23% year-on-year (YoY) revenue growth for Q3 FY26, reaching Rs. 1,321 crores, and a 16% growth for the nine-month period, totaling Rs. 3,708 crores. This growth underscores SSWL's ability to navigate a challenging global economic landscape, marked by muted export volumes and tariff-related uncertainties.

The domestic market proved to be a significant growth engine for SSWL, with record monthly sales observed in November and December 2025. This strong performance was fueled by exceptional growth in key segments: the tractor segment witnessed a remarkable 57% YoY volume increase, aluminum products surged by 38% in volume, and truck wheels grew by 16% YoY. These segments not only contributed significantly to the top-line but also demonstrated high capacity utilization, with management reporting that CV, tractor OTR, and aluminum wheel capacities are operating at 100%. The company's diversified product portfolio, encompassing steel, alloy, and aluminum knuckles, played a crucial role in mitigating risks and capitalizing on varied market demands.

Despite the robust domestic performance, SSWL faced considerable headwinds in its export markets. Exports declined by 31% in Q3 and 11% for the nine-month period, primarily due to ongoing US tariff-related uncertainties, which significantly impacted the company's high-margin steel export business. This slowdown in exports, coupled with an increase in raw material prices, led to margin pressures, with EBITDA margins contracting from 11.0% in Q3 FY25 to 9.7% in Q3 FY26. However, management highlighted that raw material price increases are a pass-through, typically adjusted quarterly, which helps to stabilize margins over the year. To counter the US market challenges, SSWL has strategically diversified its export base, with Europe now accounting for over 58% of its export revenue, demonstrating agility in adapting to global trade dynamics.

Strategic Initiatives and Capacity Expansion

SSWL is aggressively pursuing strategic initiatives to bolster its growth trajectory, particularly in the high-potential aluminum segment. A major highlight is the expansion of its Bhuj facility, acquired through AMW Autocomponent Limited. By leveraging existing infrastructure, the company saved approximately Rs. 100 crores in CAPEX. This new facility, with a total expansion cost of Rs. 420 crores, is designed to add 1.2 million units of aluminum wheels and 0.6 million units of aluminum knuckles. Management anticipates this facility to generate peak revenues of Rs. 600-700 crores from wheels and Rs. 200 crores from knuckles, catering to both domestic and international markets. These projects are slated to commence before Diwali in the current calendar year, with commercial supply expected by December.

The company's commitment to the aluminum product portfolio extends beyond capacity additions. The aluminum segment has been a standout performer, showing strong momentum with adoption expanding into both Electric Vehicles (EVs) and Internal Combustion Engine (ICE) automotives. The order book for aluminum products is fully booked for the next two years, signaling robust demand and future revenue visibility. Additionally, SSWL plans a phased addition of 5 lakh units to its steel wheel capacity by FY26 and is investing in operational optimization through robotic automated processes to rationalize operating costs.

Outlook and Management Confidence

Looking ahead, SSWL's management expressed confidence in maintaining business momentum. They project a 20% revenue growth for the next financial year, targeting a turnover of Rs. 6,000 crores, with a potential to reach Rs. 6,500 crores if US tariff issues are resolved. The EBITDA per wheel is expected to improve further, aiming for Rs. 270 in Q4 FY26 and potentially Rs. 300 in the future. This optimistic outlook is underpinned by strong order visibility in key domestic segments, continued focus on premiumization, and deepening partnerships with OEMs. The company's strategic shift towards high-margin segments, coupled with ongoing investments in capacity and operational efficiency, positions it for sustained growth and enhanced shareholder value, even as it navigates external challenges.