­Established track record of operations with experienced management
Incorporated in the year 1986, Maharashtra based BWRL is a listed entity promoted by Murarilal Ramsukh Mittal, Mayank Mittal and other Mittal family members. The operations of the company are managed by the promoters as well as a team of experienced senior management personnel who are further ably supported by a strong line of mid-level managers. The extensive experience of the promoters has helped the company to establish long and healthy relationships with reputed customers and suppliers over the years. 

Acuité believes that the company will continue to benefit from the extensive experience of its management and its established track record of operations

Improvement in Operating Performance
The revenue of the company grew at a compounded annual growth (CAGR) of 33.04% over the last three years ended FY2023. The revenue of the company improved to Rs. 589.06 Cr in FY2023 as against Rs.410.68 Cr in FY2022 and Rs.250.17 Cr in FY2021. The improvement in revenue is on account of increase in volume sold and better realisations. The operating profit margin of the company expanded by 842 bps to 23.57% in FY2023 as against 15.15 % in FY2022.

Moderate Financial Risk Profile
The financial risk profile of the company is moderate marked by moderate networth, low gearing and healthy debt-protection metrics. The tangible networth of the company improved to Rs. 559.45 Cr. as on March 31, 2023 from Rs. 451.38 Cr. as on March 31, 2022 on account of accretion to reserves. The company follows a moderate leverage policy reflected in its peak gearing level of 0.32 times in FY2023 as against 0.60 times in FY2022. The total debt outstanding as on March 31, 2023 of Rs. 181.69 Cr. comprises of long term debt obligations of Rs. 127.38 Cr. , unsecured loans from protomers/directors of Rs. 2.81 Cr. , Inter corporate deposits of Rs.19.16 Cr.  and working capital borrowing of Rs. 32.34 Cr. The debt-protection metrics of the company are healthy marked by interest coverage ratio (ICR) of 6.28 times in FY2023 as against 2.68 times in FY2022 and debt-service coverage ratio (DCSR) of 3.59 times in FY2023 as against 2.09 times in FY2022. The total outside liabilities to total tangible net worth (TOL/TNW) improved to 0.37 times in FY2023 as against 0.61 times in FY2022.

Acuité believes that the financial risk profile of the company is likely to remain moderate over the medium term on account of healthy growth in scale of operations with moderate profitability and no major debt funded capex plan.

­Working Capital Intensive Nature of Operations
The operations of the company are of working capital intensive nature marked by moderate GCA days and high working capital utilisation. The Gross Current Asset (GCA) days stood at 164 for FY2023 as against 191 days for FY2022. The inventory days stood at 89 days for FY2023 as against 84 days for FY2022. The debtor days stood at 30 days for FY2023 as against 39 days for FY2022. The average bank limit utilisation of the fund based working capital limits stood at 92% for the year FY2023 and of the non-fund based working capital limits stood at 77.23%.

Susceptible to fluctuations in raw material prices
BWRL’s operations are exposed to inherent risks associated with availability of raw materials, fluctuations in prices, and changes in government regulations. The company is engaged in the business of manufacturing of all types of wire ropes, structural strands, slings and wires which find its application in general engineering, fishing, elevators, cranes, material handling, power transmission, suspension bridges, onshore/ offshore exploration, ports and shipping. The prices of these raw materials are volatile in nature; hence, the profitability is susceptible to the ability of the company to pass on the same to its customers.