This auto ancillary company’s stock has zoomed 132% in two months

Shares of Steel Strips Wheels (SSWL) were locked in the 5 per cent upper circuit band at Rs 1,788.40 on the BSE on Wednesday, having gained 6 per cent in two days, after the company signed memorandum of understanding (MOU) for over $105 million (Rs 800 crore) from Western Hemisphere.

“SSWL has signed an MoU for close to $105 million from Western Hemisphere which would cover supply of Steel and Aluminum wheels for a minimum period of 3 years,” the company said in exchange filing on Monday, August 23, 2021.

The supplies of steel wheels will begin from Chennai and Dappar plant by September 2021 and supplies from Mehsana plant for the aluminum wheels will begin by end of December 2021. This shows strong confidence of the customers in SSWL to develop long term strategic partnerships, the company said.

Separately, SSWL announced on August 20 that it has received new orders for close to $ 11 million (Rs 81 crore) from Western Hemisphere. Orders for similar capacity are anticipated in the coming months from similar customer base as businesses continue to recover rapidly, the company added.

SSWL is primarily engaged in the manufacturing business of steel wheel rims and Alloy Wheel Rims catering to different segment of automobile industry.

In the past two months, the stock has zoomed 132 per cent as compared to a 6 per cent rise in the S&P BSE Sensex.

In another development, SSWL’s board will meet on September 3, 2021 to consider sub-division/split of the equity shares of the company. SSWL will sub-divide the face value of equity shares to a lower denomination to make the stock more affordable for the small retail investors and increase liquidity.

A stock split is a corporate action in which a company increases the number of its outstanding shares by issuing more shares to current shareholders. The primary motive of a stock split is to make shares seem more affordable to small investors. Although the number of outstanding shares increases and the price per share decreases, the market capitalization (and the value of the company) does not change.

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