Book profits in Steel Strips Wheels: Nirmal Bang

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Book profits in Steel Strips Wheels: Nirmal Bang

Nirmal Bang has come out with its report on Steel Strips Wheels (SSWL). According to the research report, investors can book full profits at current levels.

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Nirmal Bang has come out with its report on Steel Strips Wheels (SSWL).  

According to the research report, investors can book full profits at current levels.

Nirmal Bang report on Steel Strips Wheels:

"Steel Strips Wheels (SSWL), a part of the multifaceted Steel Strips group, is engaged in manufacturing wheel rims for Cars, LCV, CV's & tractors. SSWL started commercial production from 1991. The company is armed with the latest know-how, manufacturing automobile wheel rims at its state-of-the-art manufacturing unit at Chandigarh, Chennai & Jamshedpur."

"Steel Strips Wheels Ltd (SSWL) continued it strong sales performance in Q2 FY11 growing 62.6% on YoY basis to Rs 157.44 Crores. On a MoM basis sales were higher by 5.9%. The number of wheels sold were higher by 42.74 lacs YoY. The company recently announced a preferential allotment of 5.88% to Sumito Metal Industries at Rs. 520 per share. SSWL intends to increase its Chennai Plant facility by 4.0 million wheels by March 2011; at a cost of Rs 60 crores."

"We expect the company's sales and profitability to continue to remain strong on account of expansion plans and constant flow of orders. SSWL sales are expected to grow at a CAGR of 52% during FY 2010 to FY 2012. While PAT is expected to grow at a CAGR of 84% during the same period. However, at the CMP of Rs. 412 per share, we believe that the growth has already been factored in as the stock is trading at 16.45x FY11 EPS and 12.68x FY12 EPS which is above its historical trading range. Based on the EPS estimate of Rs 32.50 and target multiple of 11.0x we arrive at a target of Rs 360 per share for FY12. We initiated coverage on SSWL on 31 May 2010 at Rs 133 and it subsequently achieved our target price. At this level we recommend investors to book full profits," says Nirmal Bang research report.

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To read the full report click on the attachment