| Established track record and experienced management
BCPL has an established operational track record of over 25 years in the iron and steel industry and has established its position in the Bihar and Jharkhand markets. The promoters, Mr. Rajeev Kumar Kanodia and Mr. Sanjeev Kanodia, possess more than two decades of experience in the iron and steel sector. Over the years, the company has developed a market presence and maintained long-standing relationships with its customers as well as with suppliers. BCPL sells its products mainly through a dealer network and currently has around 1,000 dealers associated with it. Acuite believes that BCPL will continue to get benefited from the experienced promoter along with its established market presence.
Sustained Scale of operation with improvement in operating profitability:
The company's total operating revenue moderated marginally to Rs. 753.71 crore in FY25 from Rs. 761.01 crore in FY24, primarily due to lower realizations following a correction in steel prices. However, revenue has improved marginally to Rs. 764.61 crore in FY26 (estd), supported by higher sales volumes. Operating profitability witnessed marginal improvement, with EBITDA margin increasing to 4.24% in FY25 from 3.95% in FY24, mainly driven by lower power costs. However, the PAT margin declined to 1.93% in FY25 from 2.29% in FY24 due to higher finance costs and prior-period tax adjustments. Going forward, the company plans to expand its TMT bar manufacturing capacity from 1.80 lakh MTPA to 2.40 lakh MTPA by FY28, which is expected to support revenue growth through higher production and sales volumes. Further, the company is in the process of setting up a 0.5 MW captive solar power plant, expected to be operational by FY28. The proposed solar project is likely to reduce power costs, enhance operational efficiency, and support margin improvement over the medium term. Acuite believes that the company's operating performance is expected to improve further, supported by the timely completion and stabilization of the planned capacity expansion and solar power projects.
Comfortable Financial risk profile:
The financial risk profile of BCPL remained comfortable, supported by an increase in net worth, low gearing levels, and comfortable debt protection metrics. The company's tangible net worth improved to Rs. 115.65 crore in FY25 from Rs. 102.16 crore in FY24, driven by accretion to reserves. Total borrowings increased to Rs.78.83 crore in FY25 from Rs. 52.33 crore in FY24, mainly due to higher short-term borrowings, resulting in a marginal moderation in the gearing ratio to 0.68 times as on March 31, 2025, compared to 0.51 times in the previous year. The company's debt protection metrics remained comfortable, with the Interest Coverage Ratio (ICR) and Debt Service Coverage Ratio (DSCR) standing at 4.72 times and 2.69 times, respectively, in FY25. Further, the Total Outside Liabilities to Tangible Net Worth (TOL/TNW) and Debt to EBITDA ratios stood at 0.81 times and 2.19 times, respectively, as on FY 25. Acuité believes that BCPL's financial risk profile is expected to remain comfortable over the medium term, supported by comfortable coverage indicators despite the marginal moderation in leverage metrics.
Efficient Working Capital Management:
The company's working capital management remained efficient, albeit with a marginal increase in Gross Current Asset (GCA) days to 52 days in FY25 from 44 days in FY24, primarily due to an increase in other current assets. Other current assets increased to Rs. 35.74 crore in FY25 from Rs. 12.46 crore in FY24, mainly on account of higher advances to suppliers, which stood at Rs. 34.86 crore in FY25 compared to Rs. 11.67 crore in FY24. Debtor days remained stable at 19 days in FY25 as against 18 days in FY24, in line with the company's average collection period of 15–20 days. Inventory holding period improved to 15 days in FY25 from 20 days in FY24. The company generally maintains an average inventory holding period of 15–20 days. Further, creditor days stood at nil in FY25 as compared to 7 days in FY24, as the company largely follows cash and carry model with its suppliers. Acuité believes that the company's working capital management is likely to remain efficient over the medium term, supported by its prudent inventory and receivables management practices.
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| Project Implementation risk:
The company plans to expand its TMT bar manufacturing capacity from 1.80 lakh MTPA to 2.40 lakh MTPA by FY28 to cater to the increasing demand for TMT bars in Bihar. It also plans to install a 0.5 MW captive solar power plant to reduce power costs and improve operational efficiency. The total project cost is estimated at Rs. 40 crore, of which Rs. 20 crore will be funded through borrowings and the remaining Rs. 20 crore through internal accruals. As per management, the Company has already incurred Rs.10 crore for this project through internal accruals. While the expansion is expected to support future growth and improve profitability, the project remains exposed to execution and stabilization risks. Acuité believes that the proposed capacity addition should be supported by the expected rise in demand; however, timely completion of the project and successful stabilization of the same will remain key monitorable.
Intense competition and inherent cyclicality in the steel industry
The company is operating in a competitive and fragmented nature of industry due to the presence of many unorganized players on account of low entry barriers. Moreover, demand for steel products predominantly depends on the construction and infrastructure sectors. Additionally, operating margins are vulnerable to fluctuations in input costs, particularly iron ore and coal, as well as variations in price realization of finished goods. Changes in the prices and availability of key raw materials like iron ore directly influence the profitability of the company’s finished products. Any substantial decline in demand and prices that negatively affect operating margins, and cash flow will continue to be a key monitorable factor.
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