| Strong parentage and experienced management
The management of the company has an extensive experience of more than two decades in the iron and steel industry, through their association with other group companies of “Bansal Group”. The group has established its own brand ‘Bansal TMT Sariya’ which has a strong regional market recall for TMT bars. The promoters of the Bansal Group, Mr. Anil Bansal and Sunil Bansal started the road, and civil construction works three decades ago and now their sons, Mr. Kunal Bansal and Mr. Karthik Bansal, the promoter directors of the BOMPL look after the day-to-day affairs of the company. Acuité believes that the long-standing experience of the management shall continue to benefit the company going forward, resulting in steady growth in the scale of operations.
Demonstrated track record of operations supported by steady increase in the volumes
While the revenue of the company stood moderated to Rs. 295.70 Cr. in FY25 (Rs. 333.85 Cr. in FY24) pertaining to the subdued demand and lower realisations, however, in FY26, the company recorded an operating revenue of Rs. 320.26 Cr (Est.). The improvement in FY26 is reflected by improving volumes of TMT bars and increasing realisations for the MS Billets. Moreover, the operating margin has improved over the past three years from 2.34 percent in FY23 to ~4.85 percent in FY26 (Est.) on account of reduced input costs and improving operating efficiency. Going forward, the management expects to sustain their operations, supported by improving capacity utilisation and realizations, while maintaining margins of around 5 percent.
Moderate financial risk profile
The company’s financial risk profile is moderate marked by comfortable tangible net worth of Rs. 58.75 Cr. as on March 31, 2025 (Rs. 54.79 Cr. as on March 31, 2024), improved owing to accretion of profits to reserves. Further, Acuité has considered unsecured loans amounting to Rs. 25.00 Cr. as quasi-equity on account of covenant stipulated by the lender. Moreover, the total debt of the company stood reduced to Rs. 45.71 Cr. as on March 31, 2025 (Rs. 48.03 Cr. as on March 31, 2024) and therefore, the gearing ratio (debt-equity) stood decreased to 0.78 times as on March 31, 2025 (0.88 times as on March 31, 2024). Further, the debt protection metrics stood comfortable with interest coverage ratio of 2.29 times in FY25 (2.44 times in FY24) and debt service coverage ratio of 1.32 times in FY25 (1.57 times in FY24).
Going forward, the financial risk profile is expected to improve further on the back of steady cash accruals and absence of any significant debt funded capex.
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| Moderately intensive working capital operations
The company’s working capital profile remains moderately intensive, with gross current assets (GCA) increasing to 122 days in FY25 from 87 days in FY24, largely driven by higher inventory and receivables. The company-maintained inventory levels of 45 days in FY25 (28 days in FY24). Further, the company extends a credit period of around 60-75 days to their customers as reflected by the debtor levels of 72 days in FY25 (56 days in FY24). Moreover, the company receives similar credit period from their suppliers, resulting in creditor days of 61 days in FY25.
Inherent cyclical nature of the steel industry
The company's performance remains vulnerable to cyclicality in the steel sector given the close linkage between the demand for steel products, domestic and global economy. The end-user segments such as real estate, civil construction and engineering also display cyclicality. Further, operating margins are also vulnerable to volatility in the input prices (sponge iron, iron ore and coal) as well as realisation from finished goods. The prices and supply of the main raw material, sponge iron, directly impacts the realisations of finished goods. Any significant reduction in the demand and prices adversely impacting the operating margins and cash accruals of the company will remain a key monitorable.
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