Bansal Wire Industries Limited (BANSALWIRE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 and 9 months FY '25 Conference Call of Bansal Wire Industries Limited. From the management, we have Mr. Pranav Bansal, MD and CEO; and Mr. Ghanshyam Gujrati, CFO, to take the discussion forward. We also have an Investor Relations team from Adfactors. [Operator Instructions] I now hand the conference over to Mr. Darshan Mankad from Adfactors PR for opening remarks. Thank you, and over to you, sir.

Thank you, Sagar. Good afternoon, everyone. We welcome you to the third quarter and 9 months ended December 31, 2025 Earnings Call of Bansal Wire Industries Limited. Before we begin the earnings call, I would like to mention that some of the statements made during today's call might be forward-looking in nature. And hence, it may involve risks and uncertainties including those related to the future financial and operating performance. Please bear with us, if there is a call drop during the course of the conference call. We will ensure the call is reconnected at the soonest. I will now hand over the call to Mr. Pranav Bansal, MD and CEO for his opening comments. Over to you, sir.

Yes. Thank you, Darshan. Good afternoon, everyone, and welcome to the earnings call of the third quarter for this year. It's a pleasure to connect with you all -- connect with you all again as we share the progress and performance of Bansal Wire Industries Limited. I hope the new year has begun on a positive note for you and your families. On behalf of the entire Bansal family, we extend our best wishes. I trust you've had a chance to review our results press releases and the investor presentation, which are available on the stock exchange and on our website. Joining me today on the call is our CFO, Mr. Ghanshyam Gujrati, who will take you through the financials in detail and answer your queries. Just to give you a brief, the third quarter of FY '25 has been, in fact, a landmark period for us, showcasing exceptional performance, driven by strong demand across our core sectors. Our unwavering commitment to innovation and sustainability continues to reinforce our market leadership as we remain ahead of our projections for the year till now. This quarter also marked the commencement of production in our specialty wire vertical, which has been a vertical in the -- behind which we've all been running for the last 5 years. Featuring high value-added products like bead wire, hose wire, steel tyre cord. And with the market opportunity to tap up to 4 lakh -- 4.5 lakhs tonnes annually, we have successfully established a pilot project with an initial capacity of 50,000 tonnes. This strategic [ proof ] positions us to capitalize on a growing demand while delivering superior quality solutions to our customers. We are confident that with this new capability, we will further strengthen our market presence and unlock new growth opportunities. As is already evident by the response we have received from our customers so far, as in this area also, we are ahead of schedule and doing better than our expectations, in terms of both booking as well as product approvals. Through commencement of the new products, the Dadri facility has achieved 30% capacity utilization already by December. And [ remains on track ] to fully achieve commencement by the end of this year. While the total production capacity is set to reach 6 lakh tonnes, this expansion supports our long-term growth ambitions. With this, we have already planned another phase of expansion in Dadri to take the capacity from 3.5 lakh tonnes to 4.2 lakh tonnes owing to the demand we are envisaging from others. Our export also accounted to about INR 250 crores until the end of Q3 as against INR 219 crores compared to the corresponding year, underscoring strong international demand from our products and new product offering. As we approached the close of FY '25, we remained optimistic about our growth trajectory. While challenges like fluctuating raw material prices and geopolitical risks persist, we see immense opportunity in both domestic as well as the export market. Our focus remains on operational excellences, quality and sustainability, positioning us as a reliable partner in India's growth journey. With that, I will now hand over the call to our CFO, Mr. Ghanshyam, to take you through the financial performance. Thank you.

Thank you, Pranav, Sir. Good afternoon all. I would like to share the summary of third quarter and 9-month financial performance with you. For quarter 3 financial '25, our revenue grew 53% year-on-year to INR 925 crores. EBITDA surged 99% on Y-o-Y basis to INR 73 crores, and net profit for the quarter is INR 42 crores, which is up by 172% year-on-year basis. For the 9 months, revenues stood at INR 2,567 crores higher by 46%. EBITDA rose 99% to INR 203 crores. While net profit jumped 123% to INR 113 crores. As our MD, Mr. Pranav mentioned, we are committed, and we continue to focus on our operational excellence, quality and sustainability and work on diversifying our product portfolio as well as enhance contribution from value-added products to add our margins. We are happy to report that EBITDA and net profit margin for quarter 3 has expanded by 184 basis points and 198 basis points on year-on-year terms. Now we are open for the forum for question and answer.

[Operator Instructions] The first question comes from the line of Deep Mehta from Bank of India Mutual Fund.

Congratulations for a very good set of numbers. First bookkeeping question. What was the volume for this quarter? And if you can help us with the volume number for the corresponding quarter of the last year on a like-to-like basis because we have also consolidated some of the group capacities.

So sir, the volume numbers for this quarter was about 90,000, 92,000 tonnes, including low carbon mild steel as well as the stainless steel. For the corresponding year last year, Mr. Gujrati, will you be able to give us the numbers?

Yes, it was around 60,000 tonnes last year [indiscernible].

Great, sir. My second question is regarding the recent capacity expansion which you just announced for Dadri facility. If you can help us with the quantum of the CapEx, timeline of the CapEx as well as the product mix for the incremental CapEx, and how are you looking at this?

Sir, the total expansion that was already planned was about INR 500 crores, INR 550 crores, wherein we were installing the about 3.5 lakh tonnes. Now we have increased that by about 20% to 4.20. This is owing to some demand that we are looking at different products that we're looking at in different products from our customers. Therefore, our investment will also increase by about INR 70 crores, INR 80 crores in total.

And timeline for this incremental capacity?

We will be able to do this within the first 2 quarters of next year.

Great. Just a clarification, this will be over and above the stainless backward integration, which we are planning, right? So this again, that will increase our capacity a few years down the line?

Absolutely.

Very clear. And my last question is regarding the value-added products. What has been the progress? How are -- has the sales started? How has been the initial market feedback? And how should we look at this journey going ahead?

So sir, we actually have done a little better than expected initially from the specialty wire vertical, thanks to our customers. We've got a very good response. And in fact, as we speak, we're able to sell about 100, 120 tonnes within this first month, January. So therefore, we are looking at expedited approval, especially for cold wire. And similarly for steel cord also within this month, we will be submitting samples for customers. We remain ahead of schedule as of now for sampling as well product [ review ].

The next question comes from Naman Parmar from Niveshaay Investments.

Congratulations on a good set of numbers. So firstly, I wanted to understand that how much contribution has been from the different sectors in the current quarter and 9 months?

I do not have the numbers separately for all segments, but we can find that and give that to you later.

Okay. No, only you can tell how much majorly, which sector has contributed?

But we do not disclose those numbers on a regular basis. Therefore, I cannot give it to you right now, but we will send it to you later.

Okay.

In overall, all I can say is that low carbon, the mild steel segment has increased because of the consolidation as well. Even after that, high carbon and stainless steel both have seen good -- a better volume. The exact number, we can discuss later.

Yes. And secondly, I wanted to know that how you still hedge the prices of the raw material because your end product is majorly depend on the steel only, correct? So if steel prices go up and down, so how does it impact on your margin?

Sir, what we try to do is we try to create kind of a natural hedge in our business model wherein whatever orders we have, we already have either inventory or pending orders from our raw material suppliers. So therefore, we try to keep about 70%, 75% of our pending orders and stock both against firm orders. So about 20%, 25% of my total stock is the only stock that I carry with me as a risk, which will increase and decrease as for the market situation.

Okay. So on the current business only, you will be able to make an EBITDA of around 7% to 8% only. With the increase in the value-added product, you expect how much margin expansion from here and how much value-added product will be contributing?

So sir, our margin will change according to the raw material prices. So we have kind of a cost plus model in which whatever increase and decrease there is in our raw material, we try to pass it on to the customers. Therefore, a percentage of margin would not be a very good way to track how we are doing. It will more be on EBITDA per tonne. And even in EBITDA per tonne, it keeps on differentiating because of the product mix that we have. So as far as margin is concerned, we look at more of ROC than just absolute EBITDA percentage because it will keep on changing because of raw material prices.

The next question comes from Kuber Chauhan from Anand Rathi.

Congratulations for a good set of numbers. Two questions from my side. So I just wanted to know that what has led to this kind of growth in our -- in this particular quarter? And how do we foresee the demand in the next couple of quarters, number one. And as you said that you are going with an expansion mode, right? So what would be your asset turnover from the incremental capacity, which will be installed?

So first, as far as the asset turnover is concerned what we can tell you is if you look at stand-alone Dadri -- the project, it is -- we are installing about INR 550 crores worth of equipment, and now maybe INR 600 crores for the full lack, 420,000-lakh tonne capacity that will generate. And again, in that 420,000-lakh tonnes we will be able to do a revenue of about INR 3,500 crores. So against INR 600 crores investment, we should be able to do INR 3,500 crores. For new project, as far as the current business or anything as [indiscernible] keeps -- will depend on the kind of product that we have installing. As I said, our margins keep on varying depending on the product. Similarly, the investment also keeps on varying. We have about 5,000 SKUs now in our product portfolio. For each SKU, the investment metrics or the inventory turnover, the asset turnover is a little different.

Any new products in the pipeline? How you're aiming to drive this revenue next quarter and as well as FY '26?

Perfect. So even in this quarter we have seen a big jump in revenue as well as EBITDA pertaining majorly to the consolidation that has happened within our group. So now all group companies, everything, all sales have been consolidated within Bansal Wire. There's OUC, this kind of a jump in this quarter, which should remain there, and we should only try to better it every quarter.

Aspiration for FY '26 and kind of how much or what kind -- how much we are aiming for?

So sir, as a company, I mean even in the last 10 years, we've grown at 20%, 25% on average, which is what we want to continue growing at. With this, we are also adding specialty wire vertical, which is a new vertical and which is also one of our main focus areas. So again said 20%, 25%. Now we have our existing products as well as specialty wire vertical to bank on.

So about this speciality wire vertical, where are these products are being applied majorly?

So these are products -- the main products in Specialty vertical is a product that we call steel cord. Now steel cord is a product that we will be the first and the only Indian company to make this product till now. This is used in tyres. And right now, most of this product is being imported. So this is more of an import [ subject ], which today, I mean, the market size in India is about 2 to 2.5 lakh tonnes, of which we are only started with 20,000 tonnes as a pilot project in which we've invested already INR 150 crores. There is a big potential here to grow.

So sir we are [indiscernible] all the tyre manufacturers or only certain specific customers? I'm assuming [indiscernible] tyres needed as well [indiscernible]. So we are restricted to a particular segment or for everyone?

Sir, there is no buyer consumption here. This is only for radial tyres, whether it is TBR or PCR. That is one. Second, we have only started this last month. Therefore, there needs to be an approval process, a long approval process that we are waiting for. Until then, what we are doing is from the same infrastructure, we are making something called hose wire, which is also part of the specialty wire vertical, which is used to manufacture hydraulic hose, in which our numbers still now have been a little better than expected. The response also has been better than expected.

And how much you are aiming to -- I mean how much is the contribution of the specialty wire vertical from our top line?

Right now, the pilot project is of a capacity of 20,000 tonnes. Looking at the current market prices, it should give us about INR 300 crores of revenue.

By when?

Sir, this all depends on the approval process. So the approval process takes anywhere between 9 months to 2 years.

Okay.

So it all depends on when and how we get an approval. But once we do, ramp-up is very quick. And even until that time, we will still be making hose wire, which is a byproduct with a similar kind of a return ratio. We expect the capacity utilization to be there very soon.

[Operator Instructions] The next question comes from [ Vinit Parsat ] from Investec.

Pranav, my first question is, if you can share any update on how are we seeing what are other timelines for stainless steel rod backward integration, which we were planning to take up? Any progress on that front?

In fact, as we speak, we are in the middle of processing payments for the land acquisition. We've already finalized the land in Sanand for Gujarat from GIDC. So that's in process. Within a week, I think we should have the possession of the land. And apart from that, even the equipment, I mean, we are in daily touch with our manufacturers, and we should be able to finalize some orders within the next 2 months. After this, it will take us about 12 to 15 months to really establish, 18 months. In fact, 15 to 18 months to really establish, to start production.

Okay. And was my understanding correct, we will place equipment orders in the next 2 months for this?

Absolutely, right. So within this financial year, we will try our best to finalize equipment and place orders. So that after 18 months, we should be able to start. So anywhere in the middle of '27 or even if there is a couple of months here and there, so within '27, at least, we should be able to start production in full scale.

Understood. Understood. And Pranav, second question on working capital. Now we had spoken about using something like bill discounting and other methodologies for discounting of our debtors, et cetera. Where are we on that front? Have you made any progress? You've not done anything as yet? You plan to start that soon? Any color on that?