Steel Strips Wheels, a Chandigarh-based company that designs and manufactures steel and alloy wheels, experienced a 10% slip in its stock after reporting reduced net profit numbers for the June quarter. The company’s net profit fell 1.1% year-on-year to Rs 47.5 crore, leading to a drop in its stock price to Rs 197 on the National Stock Exchange.
Despite this recent decline, Steel Strips Wheels has seen impressive growth of 24% since the beginning of the year. During the quarter, the company’s revenue from operations increased by 2.7% to Rs 1044 crore compared to the same period last year. However, expenses for the company grew significantly, reaching Rs 977 crore in Q1FY24, which is a 3.4 times increase from the same period a year ago.
Despite the challenging financial results, ICICI Direct has maintained a positive outlook on Steel Strips Wheels. The domestic brokerage firm has given the stock a buy call and set a target price of Rs 260. Their optimism is based on several factors, including the expectation of healthy volume growth, increased exports, no risk from Electric Vehicles, and consistent improvements in margins and return ratios.
Steel Strips Wheels has reason to be hopeful, as they have seen positive growth in certain areas. The company reported a 219% year-on-year increase in export volumes in June. Additionally, truck volumes in June saw a growth of 38% compared to the same period last year, while passenger car sales were up 39% for the quarter. Unfortunately, sales in the 2&3-wheeler segment and Tractor segment were down 34% and 9% respectively in June compared to June last year.
In conclusion, Steel Strips Wheels experienced a slip in its stock price after reporting reduced net profit numbers for the June quarter. Despite this setback, the company has shown promising growth in other areas such as exports and certain vehicle segments. With the support from ICICI Direct and the expectation of improved financial performance, Steel Strips Wheels remains focused on maintaining its position as a leading designer and manufacturer of steel and alloy wheels.
