HotChips - STEEL STRIPS WHEELS & BAJAJ ELECTRICALS

STEEL STRIPS WHEELS BSE CODE: 513262 Volume: 18000 CMP: Rs 341.10

Steel Strips Wheels (SSWL) manufactures single piece steel wheel rims for passenger cars, Multi Utility Vehicles, tractors, trucks, over the road vehicles as well as two and three wheelers. It is increasingly being recognized as a reputed global player in the development and production of steel wheels for OEMs.SSWL has recorded a strong topline growth consistently over the past three years growing at a CAGR of 28 per cent while EBITDA and operating profit increased at a CAGR of 16 per cent and 10 per cent respectively over the same period. Recently, the company has allotted 3.77 lakh shares to a Korean company, GS Global on a preferential allotment basis for Rs 595. SSWL is getting an EBIDTA of Rs 100 per wheel as against Rs 85 per wheel till the last quarter, which is likely to get reflected in H2FY11. Their order book stood at Rs 800 crore at the end of 30th Nov, 2010. The stock can be looked at for a medium to long term perspective.

BAJAJ ELECTRICALS BSE CODE: 500031 VOLUME: 59000 CMP: Rs 235.50

With increasing rural electrification, Bajaj Electricals’ strong nationwide distribution network gives it a better reach than its competitors in the small appliances and lightings/ fittings business. The flexibility of its outsourced business model helps the company focus on its core competencies of marketing and distribution. Bajaj is diversifying from a pure lights company into an Engineering and Projects (E&P) firm. This will boost growth and improve margins to around 11 per cent. Bajaj's strong order backlog stood at Rs 1,150 crore of which 58 per cent are from transmission towers and 32 per cent are from special projects. The average execution cycle is of 15 months, which is 1.5x FY10 E&P revenues. This gives a good visibility for the company to perform on a better note going forward. The stock can be looked at for a medium to long term perspective.