Up to 208% profit growth, 135% returns: 2 auto stocks expanding for their next growth phase

The growth outlook remains encouraging. McKinsey estimates India's domestic auto component market to grow at an annual rate of 7-8% between FY25-30. The growth would outpace the broader automotive industry's projected growth of 5-6%. Rising demand for premium vehicles, higher component content per vehicle, and increasing exports are expected to support this expansion. The shift to electric mobility is creating another growth opportunity.

India sold about 26.6 lakh electric vehicles (EVs) in FY26, up 30% from FY25. EVs accounted for 8.6% of total vehicle sales and are projected to cross 10% in FY27. This shift to EVs is also changing demand for individual automotive components. Automakers are focusing on lightweight materials to improve vehicle efficiency, performance, and driving range. One segment benefiting from this shift is automotive wheel manufacturing.

Also, Indian car buyers are gradually moving towards aluminium alloy wheels, supported by rising premiumisation. Industry estimates suggest that more than 40% of passenger cars in India now use aluminium wheels. The outlook for future growth is also encouraging. The alloy wheel market is expected to grow about 12% annually over the next five years, compared with just 4% for conventional steel wheels.

FE Stock Insights on WhatsApPGet instant alerts on high-conviction investment themes and fundamental deep dives—direct from Financial Express.Join now This shift in demand brings two leading auto ancillary companies with a significant presence in wheel manufacturing into focus. Both are already seeing the benefits of this changing market, reflected in their recent earnings. One company reported 208.3% profit growth in Q2FY27, while the other recorded an 87.5% increase.

Their stock performance has also caught Dalal Street's attention. Both shares have delivered 135% returns so far in 2026. The question now is whether the shift toward alloy wheels can support their next phase of growth. #1 Steel Strips Wheels Steel Strips Wheels (SSWL) manufactures automotive components. The company designs, engineers, and produces wheel solutions and lightweight structural components for vehicles.

SSWL’s manufacturing portfolio spans three major product categories: Steel Wheel Rims (52% of Q2FY27 revenue): This is the key product available for passenger vehicles, light and heavy commercial vehicles, tractors, two-wheelers, and off-road machinery. It features well-designed steel wheels that resemble alloy wheels while remaining affordable. Alloy Wheel Rims (45% of Q2FY27 revenue): High-margin aluminium alloy wheels designed for passenger cars, premium vehicle variants, and electric vehicles (EVs).

Aluminium Knuckles & Structural Parts (3%): Lightweight vehicle components, such as aluminium steering knuckles and hot-stamped structural body parts. They help reduce a vehicle's unsprung weight, improve fuel efficiency, and extend the driving range of EVs. SSWL’s business model is strengthened by equity and technical partnerships with global steel majors. Tata Steel holds a 6.9% stake in SSWL. The company gets priority in the raw material supply chain and collaborates on new steel grades.

Nippon Steel Corporation (Japan) holds a 5.4% strategic stake. The company is a direct Tier-1 supplier to Original Equipment Manufacturers globally. SSWL exports to 20+ countries across Europe, America, Asia, and Australia. It maintains long-standing OEM supply relationships with major car and tractor manufacturers, as well as prominent European heavy commercial vehicle companies such as Daimler, MAN, and Scania.

Portfolio Shift: Alloy Wheels Drive High-Margin Realisations SSWL’s revenue mix is ​​shifting toward higher-margin alloy and lightweight aluminium products. In Q2FY27, alloy wheels accounted for 45% of revenue, up from 37% in Q2FY26. Sales volume grew by 33% year-on-year to 12 lakh units. Strong customer demand from non-Maruti OEMs supported this growth. SSWL’s market share among these OEMs exceeds 64%.

In comparison, steel wheels' revenue share in Q2FY27 stood at 52%, down from 61% in Q2FY26. Strong demand recovery in Commercial Vehicles (truck wheels), tractor market share expansion from 43% to 45%, and surging adoption of styled high-end steel wheels drove this segment's growth. Aluminium Knuckles & Structural Parts contributed 3% to revenue. Export revenue surged 69% year-on-year to ₹187 crore, contributing 9.7% to Q2FY27 revenue.

SSWL expects export revenue to cross ₹600 crore in FY27 and targets ₹1,500 crore over the next 3 years. This would be supported by export qualifications with major European commercial vehicle makers like Daimler, MAN and Scania. Capex Blueprint: 66-Lakh Unit Target and Greenfield Expansion The company can produce 210 lakh steel wheels, with 85% of this capacity currently being utilised. Alloy wheels capacity is 50 lakh units, with 89% capacity utilisation.

The company has increased alloy wheels capacity to 54 lakh units. Work is underway to add 12 lakh units of alloy wheels capacity. This will extend the capacity to 66 lakh units. Commercial production is scheduled to begin in early April 2027. Moreover, it is also setting up a greenfield manufacturing facility in Chhatrapati Sambhajinagar, Maharashtra. It is adding 25 lakh units of alloy wheel capacity.

SSWL is adding 28 lakh units of steel wheels to target untapped markets and meet export demand. Earnings Reconciliations: Q2 Financials and Unit Economics Trials and commissioning for the facility (starting with hot stamping) are targeted for Q4CY27. Management expects new capacity additions to reach an average utilisation rate above 80% in FY28 shortly after commercial commissioning. The company also reported strong Q2FY27 financial results.

Revenue grew 60.8% year-on-year to ₹1,930 crore as volume grew 23.5%. EBITDA (earnings before interest, taxes, depreciation, and amortisation) doubled (+109.8%) to ₹235 crore, while margin expanded by 290 bps to 12.2%. EBITDA per wheel Surged to ₹404 in Q2 FY27 compared to ₹242 in Q2FY26. Net profit grew 208.3% to ₹119 crore. With continued growth in premium alloy wheels, management expects EBITDA per wheel to gradually expand toward ₹450 over time.

SSWL Share Price #2 Wheels India Wheels Indiamanufactures steel and aluminium wheels for passenger cars, trucks, buses, tractors, and earthmovers, alongside air suspension systems and wind turbine components. Wheels India holds a 35% market share in steel passenger car wheels. It collects revenue by selling these manufactured parts to vehicle makers and industrial firms. Revenue Architecture: 83% Automotive Base Anchors Global Footprint Their income breaks down into two main divisions: Automotive Parts (83% of sales): This is their main source of revenue.

It includes wheels for cars, trucks, tractors, and earthmovers, as well as air suspension systems for buses. Industrial Parts (17% of sales): This includes metal parts for wind turbines, hydraulic cylinders, and building structures. About 75% of what they make is sold in India to tractor companies, car factories and bus makers. About 25% of their products ship to 27 other countries. Their biggest foreign growth comes from sending construction wheels and windmill parts to the United States.

Alloy Wheel Expansion: Monthly Run-Rate Targets 1.7 Lakh Units The company’s current monthly manufacturing capacity for alloy wheels is 80,000 units. By March, this capacity will increase to 130,000 units. In future phases, this capacity will reach 170,000 wheels. The monthly EBITDA break-even level is 40,000 wheels, a volume that current production has already attained. From December onwards, this line is expected to achieve a positive 'Profit Before Tax'.

Management estimates that volumes will double by Q4FY27. The goal is to increase production to 100,000 wheels per month by Q1FY28. At this volume, the segment is expected to achieve an EBITDA margin of 10-12%. The company aims to grow its share of the Indian cast aluminium wheel market from low single digits to 10-15%. Also, Indian state transport corporations are upgrading bus fleets and buying more electric buses.

This is driving demand for air suspension. The company is adding capacity internally and across supplier lines, allowing it to fill larger orders and lower production costs. The hydraulic cylinder business currently operates on low profit margins on a small sales base. Wheels India is reorganising factory layout by Q3. Higher output and export shipments start in January. Management expects to move this product line into double-digit margins.

Further, it also plans to double wind turbine component machining over the next 18-24 months. Balance Sheet Turnaround: Q2 Profit Surges 87.5% as Debt Drops to ₹910 Cr In Q2FY27, the company's revenue grew 35.4% year-on-year to ₹1,711 crore. Key drivers included strong overseas demand for wheels used in heavy construction equipment, a 50% increase in demand for air suspension systems, and higher sales of steel and aluminium wheels.

EBITDA rose 8.4% to ₹143.7 crore, and the margin stood at 8.4%. Net profit almost doubled (+87.5%) to ₹60 crore, up from ₹32 crore in Q2FY26. Management targets reaching a double-digit EBITDA margin (10%) over the next two years. The company has also reduced its debt by 22% from ₹1,167 crore in March 2026 to ₹910 crore in September. Lower bank interest payments will help support profit in upcoming quarters.

Wheels India Share Price Balance Sheet Showdown: Capital Intensity vs Return Ratios Wheels India boasts a strong Return on Capital Employed (ROCE) and Return on Equity (ROE) in comparison to SSWL. Valuation-wise, both companies trade at a premium to their respective three-year median valuations. Compared to the industry, SSWL trades at a discount, while Wheels India trades at a slight premium. ParticularsPrice-to-Earnings Multiple (X)Return RatiosCompany3Y MedianROE (%)ROCE (%)SSWL25.516.512.215.9Wheels India28.520.715.818.8Industry27.814.416.4Source: Screener.in (As of October 31, 2026) Steel Strips Wheels and Wheels India are both positioned to benefit from the growing demand for alloy wheels.

SSWL has a larger existing alloy wheel business, with alloy products contributing 45% of Q2FY27 revenue. Its planned expansion to 66 lakh units, followed by the greenfield capacity addition, could support further growth. Its target of capturing 10-15% of India's cast aluminium wheel market offers significant growth potential. These companies could be worth keeping on your watchlist. Disclaimer: Note: Throughout this article, we relied on data from and the companies' investor presentations.

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