Bansal Wire Industries Limited Q1 FY 2025 Conference Call Summary
Financial Performance
• Net Profit: Increased by 82% to Rs. 31 crores
• Revenue: Up 49% to Rs. 817 crores
• EBITDA: Rose 127% to Rs. 62 crores
• EBITDA Margin: Improved by 260 basis points to 7.6%
Company Position
• Market Standing: Second-largest steel wire producer in India; largest stainless steel wire producer
• Manufacturing Facilities: Five facilities with a diverse customer base
• Sales Volume: 140% year-over-year increase, totaling approximately 76,000 tonnes
Future Plans
• Specialty Wires: New vertical planned for Q3 2024, facing delays due to supply chain issues
• Production Timeline:
• Specialty wire production expected to start by November/December 2023
• Hose wire sales anticipated soon after
• Bead wire production expected by end of current quarter or early next quarter
Growth Projections
• Historical Growth Rate: 20-25%
• EBITDA Increase: Projected 80% for the current year
• Revenue Target: Rs. 2,000 crores from steel cord in 5-6 years with a 25% EBITDA margin
• Return on Capital Employed (ROCE): Improved from 18.46% to 23.85%
Production and Market Strategy
• Steel Cord Production: Aiming to be the first Indian manufacturer, with plans to produce hose wire initially
• Market Size: Approximately 250,000 tonnes for steel cord, with plans to scale to 200,000 tonnes
• Specialty Wires: Plans to produce IHT and OHT wires for electric vehicles
Capital Expenditures (CAPEX)
• Dadri Plant: Total CAPEX of Rs. 500 crores, with Rs. 250 crores already spent
• New Steel Wire Facility: Rs. 150 crores invested for 20,000 tonnes capacity
• Larger Facility: Projected CAPEX of Rs. 2,500 crores over five years
Operational Insights
• Net Cash Generation: Negative Rs. 41 crores in Q1 due to investments
• Working Capital Cycle: 70 days
• Utilization Rates: Manufacturing facilities operating at 88-90%
• Peak Revenue Potential: Anticipated at Rs. 5,000 crores once Dadri facility is operational
Debt and Financial Management
• Gross and Net Debt: Rs. 816 crores and Rs. 813 crores, respectively
• Production Margins: Hose wire margin projected at Rs. 80-90 per kg
• Consolidation: Shutting down two group companies to streamline operations
Production Capacity Goals
• Current Production Mix:
• 27,000 tonnes of high carbon
• 28,000 tonnes of mild steel
• 21,000 tonnes of stainless steel
• Capacity Expansion: Aiming to increase annual capacity from 2.5 lakh tonnes to 6 lakh tonnes by year-end
Conclusion
• Focus: Emphasis on production capacity expansion and value creation for stakeholders.