How has been the historical performance of Steel Str. Wheel?

Revenue and Profit Trends

Over the four-year period ending March 2025, Steel Str. Wheel’s net sales have shown a robust upward trend, rising from ₹3,559.95 crores in March 2022 to ₹4,429.00 crores in March 2025. This represents a compound growth reflecting the company’s expanding market presence and operational scale. Total operating income mirrored this growth, with no other operating income reported during these years.

Operating profit (PBDIT) excluding other income remained relatively stable, fluctuating slightly but maintaining a margin around 11%, with a peak operating profit margin of 12.72% in March 2022 and a slight dip to 10.94% by March 2025. The gross profit margin, however, experienced a notable decline from 10.69% in March 2022 to 8.36% in March 2025, indicating rising costs or pricing pressures.

Profit after tax (PAT) exhibited volatility, with a significant spike in March 2024 to ₹675.13 crores, largely influenced by an exceptional item recorded that year. Excluding this anomaly, PAT hovered around ₹195 crores in March 2025 and ₹193.80 crores in March 2023, reflecting a PAT margin contraction from 5.77% in March 2022 to 4.41% in March 2025.

Cost Structure and Expenditure

The company’s raw material costs have risen steadily from ₹2,221.65 crores in March 2022 to ₹2,878.09 crores in March 2025, reflecting increased input prices or higher production volumes. Employee costs also increased significantly, from ₹235.80 crores to ₹379.87 crores over the same period, signalling investment in human resources. Other expenses remained substantial, hovering around ₹700 crores annually.

Total expenditure excluding depreciation rose from ₹3,107.17 crores in March 2022 to ₹3,944.66 crores in March 2025, consistent with the company’s revenue growth but also indicating margin pressures. Interest expenses increased from ₹85.42 crores in March 2022 to ₹117.24 crores in March 2025, suggesting a higher debt servicing burden.

Balance Sheet and Financial Position

Shareholder’s funds have shown a healthy increase, rising from ₹951.84 crores in March 2022 to ₹1,625.68 crores in March 2025, supported by growing reserves. The book value per share improved markedly from ₹11.52 to ₹98.01, indicating enhanced net asset value per share over the period.

Total liabilities increased moderately from ₹2,701.59 crores to ₹3,398.91 crores, with total debt peaking at ₹1,047.93 crores in March 2024 before declining to ₹827.43 crores in March 2025. This reduction in debt levels in the latest year may reflect deleveraging efforts or improved cash flows.

On the asset side, net block (fixed assets net of depreciation) expanded from ₹1,359.62 crores to ₹1,781.46 crores, signalling ongoing capital investments. Capital work in progress also rose, indicating continued expansion or modernisation projects.

Cash Flow Analysis

Operating cash flow showed variability, with ₹406 crores generated in March 2022, dipping to ₹192 crores in March 2024, then recovering to ₹516 crores in March 2025. Investing activities consistently reflected cash outflows due to capital expenditure, while financing activities fluctuated, with a notable cash outflow of ₹353 crores in March 2025 compared to an inflow in the previous year.

Despite these fluctuations, the company maintained a positive net cash position, though closing cash and bank balances declined from ₹57.91 crores in March 2022 to ₹10.10 crores in March 2025.

Summary and Investor Considerations

Steel Str. Wheel’s historical performance reflects a company that has steadily expanded its revenue base and asset footprint while managing to increase shareholder equity significantly. However, profit margins have experienced some pressure, particularly evident in the decline of gross and PAT margins over the years. The spike in profit after tax in March 2024 was an outlier, influenced by exceptional items, and should be considered cautiously when assessing underlying profitability.

The company’s debt levels have fluctuated but show signs of reduction in the latest fiscal year, which could improve financial stability and reduce interest burdens going forward. Capital expenditure remains robust, indicating a focus on growth and capacity enhancement.

Investors should weigh the steady top-line growth and improving book value per share against margin pressures and cash flow variability. The company’s ability to manage costs and optimise capital structure will be key to sustaining long-term value creation.

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