Long track record of operations and segmental diversification
BST Infratech Limited (BSTIL) has established a long-standing presence of around two decades in the manufacturing industry of iron & steel products. BSTIL is supported by the extensive experience of Mr. Gopal Kumar Agarwal and Mr Pradip Kumar Agarwal. The company has achieved segmental divergence and executes EPC contracts relating to installation and supply of power transmission towers along with the manufacturing business. Acuité believes, that the experienced management and the established presence of the BSTIL will continue to benefit the company going forward.

Locational advantage
BSTIL’s unit is located at Raniganj, West Bengal a major steel manufacturing and consuming hub due to its large coal reserves, BIL avails operational advantages from its strategic location. The manufacturing unit is located under a single roof where they have two rolling mills. 1 rolling mill is used for manufacturing of TMT and wire rod, whereas the other rolling mill is used for manufacturing MS Strip and MS Structural steel. BIL’s clients are largely located in the state of West Bengal resulting in low transportation cost and timely delivery of products. Proximity to both raw materials sources and customers results in significant freight cost reduction and enhanced sales volume.

Improvement in operating performance
The company has witnessed a revenue growth of around 8.24 percent in FY2024 and has achieved revenues of  Rs.1220.30 Cr. in FY2024 as compared to Rs.1127.38 Cr. in FY2023. The increase in operating income is driven by increase in the capacity utilisation of the products with better price realisation along with regular order flow coupled with timely execution. Further in 11M FY25 the company has reported revenue of Rs. 1051 Cr. (Gross level) and expected to close the year with revenue of Rs. 960 Cr. (Net level) for FY25. The profitability witnessed a volatility, wherein the operating margin  stood at 3.23 per cent in FY2024 as against 3.18 percent in FY2023 and 4.44 percent in FY2022 on account of rising input cost as prices of intermediate product has increased. Further, the PAT margins improved and stood at 0.62 percent in FY2024 as against 0.56 percent in FY2023 and 0.52 percent in FY2022. Further, in 11 M FY25 the operating margin of the company stood at 4.62 per cent and PAT margin at 1.15 percent. Acuite believes, the operating performance of BSTIL would remain steady owing to stable revenues with comfortable profitability. 

Moderate financial risk profile
The company’s financial risk profile remained moderate marked by moderate net worth, moderate gearing and modest debt protection metrics. The tangible net worth of the company improved and stood at Rs.116.94 Cr. as on March 31, 2024 as against Rs.108.01 Cr. as on March 31, 2023 due to accretion to reserves. Acuité has treated unsecured loans of Rs.25.36 Cr. in FY2024 as a part of net worth as the management has undertaken to maintain this amount in the business over the medium term.  Gearing of the company stood moderate at 1.99 times as on March 31, 2024 as against 1.80 times as on March 31, 2023. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 2.94 times as on March 31, 2024 as against 3.02 times as on March 31, 2023. The modest debt protection metrics of the company is marked by Interest Coverage Ratio at 1.64 times as on March 31, 2024 and Debt Service Coverage Ratio at 1.64 times as on March 31, 2024 as against 1.73 times and 1.22 times as on March 31, 2023 respectively. Net Cash Accruals/Total Debt (NCA/TD) stood low at 0.07 times as on March 31, 2024 and 0.06 times FY2023. Acuité believes that going forward the financial risk profile of the company will further improve on the back of absence of major debt funded capex plans.

Working capital intensive nature of operations
The operations of the company remained working capital intensive marked by modest but improving Gross Current Assets (GCA) of 120 days as on March 31,2024. The inventory holding stood at 76 days as on 31st March, 2024 as compared to 79 days as on 31st March, 2023. Further, the debtor period stood comfortable at 34 days as on March 31, 2024 as compared to 34 days as on 31st March 2023. Also, the creditor period stood at 29 days in FY2024 as against 37 days in FY2023. The bank limit utilization for fund based limits stood high at ~95 per cent and for non-fund based facilities it stood low at ~33 per cent for six months ending February 2025. Acuité believes that the working capital operations of the company would remain working capital intensive due to its nature of business.

Cyclical nature of the industry
The company’s performance remains vulnerable to cyclicality in the steel sector as demand for steel depends on the performance of the end user segments such as construction and real estate. Indian steel sector is highly competitive due to the presence of a large number of players. The operating margin of the company is exposed to fluctuations in the prices of intermediate goods as well as realization from finished goods.