Bansal Wire
Industries is the largest stainless-steel wire manufacturer and the second
largest steel wire manufacturer by volume in India. Arun Gupta, Anita Gupta,
Pranav Bansal and Arun Kumar Gupta HUF are the promoters of the company.
Manufacturing
steel wires since the last 38 years, the company caters to various sectors,
with a diversified portfolio spread across high carbon steel wire, mild steel
wire (low carbon steel wire) and stainless-steel wire. It is adding a new
segment of specialty wires. These will be manufactured at Dadri.
Bansal
manufactures 220,010 tonnes of steel wire per annum, comprising 58,427 tonnes
of mild steel wire (low carbon steel wire), 84,580 tonnes of high carbon steel
wire, and 77,003 tonnes of stainless-steel wire. Products include sizes as thin
as 0.04 mm to as thick as 15.65 mm comprising high carbon steel wires for
springs, wire for ropes, mild steel wires (low carbon steel wires), stainless-steel
wires, cold heading quality wires, cable armouring wires and strips, galvanized
steel wires in high and mild steel wire (low carbon steel wire) in a wide range
of zinc coating, profile, and shaped in various steel grades in different cross-sections.
High carbon steel wires formed 22.14%,mild steel wires (low carbon steel wires)
8.21% and stainless-steel wires 51.92% of total revenue.
High carbon
steel wires refer to wires made from high carbon steel with 0.30% to 1.00%
carbon. These are known for their exceptional strength, hardness, and
durability. They are used in applications where these properties are crucial,
such as in the manufacturing of springs, cutting tools, and various industrial
components requiring resilience and resistance to wear and fatigue. Mild steel wire
is made of low-carbon steel with a carbon content ranging from 0.05% to 0.25%
and is known for its ductility, malleability, weldability, and versatile
nature. These are commonly used in power & transmission, agriculture,
poultry, fencing, and construction. Stainless-steel wire is made from a
corrosion-resistant alloy, a combination of iron, chromium, nickel and other
elements, and is used in consumer durables, hardware, automotive, agriculture
and other general engineering products.
Of the four
manufacturing facilities in the National Capital Region, India, one
manufacturing facility is in Bahadurgarh (Haryana) with three other manufacturing
facilities is in Ghaziabad (U.P.). Its existing units have an installed
capacity of 259,000 tonnes per annum (tpa) of mild steel, high carbon and
stainless-steel wires.
Bansal is
setting up India’s largest single location steel wire manufacturing facility at
Dadri. This is among the largest in Asia. The Dadri facility will have an
installed capacity of 346,000 tpa in total and will commence operations in
phases. The estimated project cost is Rs 448.816 crore, with Rs 358.463 crore being
incurred till March 2024. The balance amount will be incurred in the current
fiscal. The entire capacity of the facility will be installed by mid of FY2026.
The initial production, with a capacity of 1,000 tonnes of high carbon wires,
commenced at the Dadri facility end of January 2024. The capacity has been
increased to 3,000 tonnes of high carbon wires, with 78.50% of the capacity
utilisation till 31 March 2024. Production of mild steel wire will commence
from H1 of FY2025 at the Dadri facility, providing economies of scale.
Bansal,
with 14 global representatives, exports its products to countries like
Bangladesh, Brazil, France, Germany, Israel, Italy, Netherland, South Korea,
South Africa, Sri Lanka, Turkey, United Kingdom, United States of America, and
Vietnam. The export turnover was Rs 283.941 crore, with Europe and US markets
accounting to more than 70% of the total exports in FY2024.
Bansal markets
and sells its products under the brand name Bansal. The brand has a reputation
as a trusted brand since incorporation. It undertakes various initiatives to
promote its brands and products to maintain sales momentum and retain customers.
Raw
materials are sourced from a diversified base of suppliers. Its top 10 key raw
material suppliers for mild steel wires (low carbon steel wires) and
stainless-steel wires include Steel Authority of India, RashtriyaIspat Nigam,
Mukand, Rathi Steel and Power, and JSW Steel.
Some key
domestic and international customers include S.S. White Technologies India
Private Limited, Connecton Fasteners S.A., NHK Automotive Components India
Private Limited, Hettich, Hi-Lex India Private Limited, KEI Industries, Lapp
India Private Limited, Suprajit Engineering, Helical Springs, Haver Standard
India Private Limited, RR Kabel, Remsons Industries, and Ask Automotive.
Pursuant to
a share purchase agreement of 14 November 2023, the company acquired 2,093,637
equity shares, i.e., 26% of the shareholding of Bansal Steel & Power (BSPL)
producing high carbon wires for automotives, galvanized mild steel wire for
cables, and stainless-steel wires for exports, with an installed capacity of
130,000 tpa. Further, pursuant to the right issuance of equity shares, it was
allotted 18,842,733 equity shares. As a result, BSPL became a subsidiary of
Bansal Wire Industries with effect from 07 December 2023. Bansal Wire
Industries currently, holds 20,936,370 equity shares, i.e., 76.15% of the
shareholding, of BSPL. Further, it
entered industrial lease agreements on 08 January 2024 with Bansal High
Carbons Private Limited and Balaji Wires Private Limited, respectively, to use
their premises and equipment installed at their manufacturing facilities.
Bansal along
with subsidiary BSPL offers one of India’s most extensive steel wire product
portfolios, encompassing over 3000 stock keeping units (SKUs). Further, there
are approximately 500 SKUs common to both. The diverse portfolio of products
has been backed by the global certifications and accreditations
The Offer and the Objects
The offer comprises fresh issue of up to
29101563 equity shares at the upper price band of Rs 256 and 30658436 equity
shares at the lower price band of Rs 243, aggregating Rs 745 crore.
The net proceeds will be used from the fresh
issue towards repayment or prepayment of all or a portion of certain
outstanding borrowings amounting Rs 452.68 crore, investment in subsidiary for
repayment or prepayment of all or a portion of certain outstanding borrowings
amounting Rs 93.708 crore, funding the working capital requirements amounting
Rs 60 crore, and balance towards general corporate purposes.
The total outstanding borrowings were Rs
676.275 crore as on 31 May 2024. The total outstanding borrowings of subsidiary
were Rs 103.915 crore.
Strengths
Stainless-steel
and stainless-steel wire representing 20% and approximately 4% market share as
of 31 March 2023, respectively.
The steel
wire industry witnessed a significant CAGR of 6.9% over FY2019-23, growing to
5.6 mt, driven by an uptick in infrastructure development activities across the
country and growing production in the automobile industry. Demand is expected be
8-10% CAGR between FY2023 and 2028, growing to eight-nine mt, due to increasing
budget allocation of central and state governments for infrastructure
development and expansion of the automobile industry.
The
year-on-year customer retention stood at 64.74%, 66.06% and 68.49% in FYs2022,
2023 and 2024, respectively.
Most of the
production is after the receipt of the order at a pre-agreed price. Hence, it can
maintain the margins and work on a cost-plus model, remaining largely immune to
commodity price fluctuations. As a result, the EBITDA margins ranged between
4.73% to 6.04% consistently over last three fiscals.
The network
built is to ensure pan-India presence across all the regions of India to cater
to more than 5,000 customers spread across various sectors. There is presence
in 22 states and six union territories by way of dealer distribution network.
The Indian
steel wire industry is well-positioned to benefit from the global shift from
China-based manufacturing to China plus one strategy, resulting in new
opportunities for Indian manufacturers in the global market.
No single
customer accounts for more than 5% of sales. No individual sector or segment
constitutes more than 25% of total sales, ensuring a balanced and resilient
business model.
The product
mix and plant capabilities allow switching or adding production lines from one
sector to another, based on industry demands
Weaknesses
The steel
wire industry is highly fragmented, with the top 10 manufacturers contributing
around 22% to the overall production. Bansal Wire Industries contributes 2% to
the overall production. Other unbranded larger and medium and small
manufacturers contribute 75% to the overall production.
Operations
are subject to risks inherent to manufacturing operations, including defects,
liability for product and/or property damage, malfunctions and failures of
manufacturing equipment, fire, riots, strikes, explosions, loss in-transit for
products, accidents, personal injury or death, environmental pollution, and natural
disasters.
The Top 10
suppliers of the raw materials formed 77.26% of total raw material required in the
manufacturing processes. Any shortages, delay or disruption in the supply of
the raw materials used in the manufacturing process may have a material adverse
effect on the business, financial condition, results of operations, and cash
flows.
The operating
margin and realizations are susceptible to volatility in steel prices and
freight cost.
Substantial
working capital is required. Additional financing may be required to meet those
requirements and could have a material adverse effect on results of operations,
cash flows, and financial condition.
Negative
cash flow from operations was reported in FY2024 and FY2022.
Compliance
with various laws and extensive government regulations is required. Failure to
these norms could result to enforcement actions and penalties.
Hazardous
materials and operating activities pose a danger to people and property.
Valuation
Consolidated
sales were up by 2% to Rs 2466.03 crore in FY 2024. The OPM rose 150 bps to 5.9%.
OP increased 37% to Rs 144.46 crore. OIfell to Rs 4.86 crore from Rs 9.56crore
in FY 2023. Interest cost increased 20% to Rs 28.81 crore. Depreciation jumped
48% to Rs 13.45 crore. PBT went up31% to Rs 107.05 crore. Tax expenses were 45%
higher at Rs 31.41 crore. Net profit spurted31% to Rs 78.8 crore.
The FY2024
EPS on the post-issue equity works out to Rs 4.9. At the upper price band of Rs
256, the P/E works out to be 52.4
As of 1 July
2024, listed peers such as Rajratan Gobal Wire traded at TTM P/E of 53.6, DP
Wires at TTM P/E of 19.0,and Bedmutha Industries at TTM P/E of 35.5.
For FY2024,
Banal Wire Industries’ Ebitda margin and ROE stood at 6.0% and 21.2% as compared
to 14.7% and 15.4% for Rajratan Gobal Wire, 5.5% and 17.4% for DP Wires, and 9.6%
and 19% for Bedmutha Industries, respectively.
Bansal
Wire Industries: Issue Highlights
|
Fresh
issue (in Rs Crore)
|
745
|
For Fresh
Issue Offer size (in number of shares )
|
|
- in Upper price band
|
29101563
|
- in Lower price band
|
30658436
|
Price Band
(Rs)
|
243-256
|
Pre issued
capital (Rs crore)
|
63.73
|
Post issue
capital (Rs crore)
|
78.28
|
Pre issue
promoter shareholding (%)
|
95.78
|
Post issue
Promoter shareholding
|
77.97
|
Bid Size
(in No. of shares)
|
58
|
Issue open
date
|
03-07-2024
|
Issue
closed date
|
05-07-2024
|
Listing
|
BSE,NSE
|
Rating
|
43/100
|
Bansal
Wire Industries: Consolidated Financials
|
Particulars
|
2203 (12)
|
2303 (12)
|
2403 (12)
|
Total
Income
|
2198.36
|
2413.01
|
2466.03
|
OPM
|
4.8
|
4.4
|
5.9
|
Operating
Profits
|
106.43
|
105.15
|
144.46
|
Other
Income
|
6.71
|
9.56
|
4.86
|
PBIDT
|
113.15
|
114.71
|
149.31
|
Interest
|
26.58
|
24.04
|
28.81
|
PBDT
|
86.57
|
90.66
|
120.50
|
Depreciation
|
8.44
|
9.11
|
13.45
|
PBT
|
78.13
|
81.55
|
107.05
|
Share of Profit/loss
of JV
|
0.00
|
0.00
|
0.00
|
PBT Before
EO
|
78.13
|
81.55
|
107.05
|
EO
|
0.00
|
0.00
|
3.16
|
PBT after
EO
|
78.14
|
81.55
|
110.21
|
Provision
for Tax
|
20.85
|
21.62
|
31.41
|
Profit
after Tax
|
57.29
|
59.93
|
78.80
|
PPA
|
0.00
|
0.00
|
0.00
|
Net profit
after PPA
|
57.29
|
59.93
|
78.80
|
MI
|
0.00
|
0.00
|
0.00
|
Net profit
after MI
|
57.29
|
59.93
|
78.80
|
EPS (Rs)*
|
3.7
|
3.8
|
4.9
|
*EPS
annualized on post issue equity capital of Rs 78.28 crore of face value of Rs
5 .each
|
# Not
annualised due to seasonality of business
|
Figures in
Rs crore
|
Source: Capitaline
Corporate Database
|
|