Bansal Wire Industries Ltd. Q1 FY27 Earnings Call Summary

Event Participants

Executives

2
Ghanshyam Das Gujrati, Pranav Bansal

Analysts

10
Aditya Bhartia, Anil Shah, Deeya Jain, Jay Patel, Jigar Jani, Kunal Sharma, Rahul Girish Shah, Shubham Thorat, Vinil Shah, Yog Rajani

Financials & KPIs

Geographic & Segment Commentary

• Core Business & End-Markets: Demand recovered across almost all sectors during Q1; automotive remains strong, exports are improving. Industry grows at ~7–8%, while Bansal targets ~20% growth through market share gains. Portfolio is diversified – no end-market exceeds 25% of sales and no customer exceeds 3–4% of sales.
• B2C Segment (Farming, Fencing, Poultry): New steel wire range launched; contributed 10% of Q1 sales. EBITDA per tonne is 20–30% higher than low-carbon B2B business. Management targets 50% of low-carbon volume (25% of total sales) from B2C; Q2–Q3 are seasonally softer, but growth momentum is expected to continue.
• Speciality Wires (Steel Cord, IHT, OHT): Steel Cord received its first bulk trial order from a leading Indian tyre manufacturer (sample approval passed; some customers skipped field trials). IHT has 9,000 tpa capacity, ~80% customer approvals complete, targeting 50% utilisation next month and 60–80% by year-end. OHT commissioning shortly – combined IHT+OHT capacity to reach 15,000 tpa. EBITDA target ₹10–20/kg at optimum utilisation; Steel Cord pilot capacity is 20,000 tpa.
• Sanand Facility: Expansion underway with ~90,000 tonnes wire capex; only some excess land may be monetised, not the facility itself.

Company-Specific & Strategic Commentary

• Geopolitical Disruption Management: West Asia tension disrupted natural gas supply in Q1; gas costs rose ~1.5x blended (tripled in some plants). Management absorbed the cost increase on committed orders to protect long-standing customer relationships. Production restored via alternative energy sources; operations back to normal levels from mid-May, with elevated gas costs now being passed on in new orders.
• Market Share & Product Innovation: Core business continues gaining share across end-markets. R&D develops 20–25 new SKUs per month and ~250 new products annually. Growth engine splits into one-third existing customers, one-third market share gains, one-third new products.
• Working Capital Discipline: Delivered ₹121 crore operating cash flow in a seasonally soft quarter. Initiatives include lower inventory days, stricter receivables, channel financing, and renegotiated customer terms. Management maintains advance payments to suppliers to retain negotiation leverage as India's largest wire rod purchaser.
• Flexible Capex / Backward Integration: More than 50% of plant and machinery is manufactured in-house, enabling new capacity in ~6 months. FY27 capex capped at ₹200–250 crore; strategy is to begin each year with only 20–25% excess capacity.
• ROCE Target: Management targeting 25% ROCE in the current business (with or without Speciality) in the near term, supported by improving cash flows and a reducing capital base.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Q1 Profitability & Margin Recovery

• Question: How would you rate Q1, and will continued West Asia conflict impact growth and margins? (Kunal Sharma, Veritas Research)
• Answer: The first 45 days absorbed ~₹5,000/tonne higher consumable costs on committed 30–40 day orders, pulling EBITDA to ₹2/kg from ₹7/kg; new orders were repriced immediately. From mid-May, EBITDA is back to ₹7–8/kg. (Pranav Bansal)
• Question: Given the cost-plus model, was the margin hit only because of the committed order book? (Kunal Sharma)
• Answer: Yes – inventory is naturally hedged by ~30–40 days of fixed-rate orders. This time costs escalated overnight, and the company chose not to renegotiate committed orders to support long-standing customers; all new orders carried escalated prices from day one. (Pranav Bansal)
• Question: Does 20% volume growth plus higher per-kg EBITDA mean ~30% EBITDA growth? (Aditya Bhartia, Investec)
• Answer: EBITDA guidance remains at least 20%; upside is uncertain with three quarters remaining and possible ₹0.15/kg swings. (Pranav Bansal)

Steel Cord Trial Order Progress

• Question: Does the first trial order imply customer approval and the start of an order book? (Kunal Sharma)
• Answer: There are two approval stages – sample approval and field/bulk trial. Most customers have passed sample approval; one leading tyre maker skipped field trial and moved directly to bulk trial. Four trials are needed in this case, each taking 2–3 months; confirmed order book only after trials. More trial orders are expected this quarter. (Pranav Bansal)

Speciality Wires – IHT/OHT Ramp-Up & Margins

• Question: What is IHT's revenue share and how large can OHT become? (Aditya Bhartia)
• Answer: Combined IHT+OHT capacity is currently 9,000 tonnes, reaching 15,000 tonnes with OHT commissioning. IHT targets 50% utilisation next month and optimum within the year; ~80% customer approvals done. EBITDA at optimum will be similar to Steel Cord on a percentage basis. (Pranav Bansal)
• Question: What is OHT's per-tonne EBITDA and utilisation for decent margins? (Deeya Jain, Sapphire Capital)
• Answer: ₹10–20/kg EBITDA range for IHT/OHT combined once at optimum; break-even at ~60% utilisation, decent margins at 70–80%. (Pranav Bansal)

B2C Business Ambition & Margin Premium

• Question: What is the B2C ambition and how does profitability differ from B2B? (Aditya Bhartia)
• Answer: B2C is in the low-carbon segment (50–55% of total volume); ambition is 50% of low-carbon volume from B2C (~25% of total sales). B2C sales doubled last year and contributed ~10% in Q1; margins are 20–30% higher EBITDA per tonne than low-carbon B2B. (Pranav Bansal)

Volume Growth Confidence & Capacity Utilisation

• Question: 20% growth implies 145,000 tonnes per quarter (85% utilisation) – what gives confidence? (Jigar Jani, Nuvama PCG)
• Answer: 20% growth has been the track record for years, split one-third existing customers, one-third market share gains, one-third new products (20–25 new SKUs/month, 250/year). Historically 85–90% utilisation is the sweet spot; the year started with 6.8 lakh tonnes capacity plus 60,000 tonnes commissionable, and Dadri greenfield issues are resolved. (Pranav Bansal)
• Question: If steel prices fall, will there be an inventory hit? (Jigar Jani)
• Answer: ~70–80% of inventory is booked against firm-rate orders, creating a natural hedge; gains/losses are passed to customers. A sudden price drop could actually produce a one-time gain. (Pranav Bansal)

Working Capital Sustainability & Financing Initiatives

• Question: OCF improved partly via payable financing – is it sustainable? (Yog Rajani, Omega Portfolio Advisors)
• Answer: Payable financing is only one of several initiatives; inventory days and receivable days are being reduced. The company purposely maintains advance payments to suppliers to retain pricing leverage as the largest wire rod buyer in India. (Pranav Bansal)
• Question: What is the roadmap for vendor/channel financing and receivables reduction? (Aditya Bhartia)
• Answer: Channel financing has already started; receivables have been renegotiated with customers. Most FY27/FY28 cash flow improvement is expected to come from reducing receivable days; payable days can also be extended to offset inventory carrying days. (Pranav Bansal)

Speciality ROCE & Global Competitiveness

• Question: With ₹2,000–2,500 crore capex for 2 lakh tonnes, ROCE seems only ~16% – does Speciality add value? (Jay Patel, Patel Equity)
• Answer: Expected ₹600–800 crore EBITDA on 2 lakh tonnes of Speciality output; current business is also targeting 25% ROCE, helped by cash flow-driven reduction in capital base. (Pranav Bansal)
• Question: Can the company compete globally with Jiangsu Xingda? (Jay Patel)
• Answer: Exports are unviable because Indian wire rod costs ₹10–15/kg more, wiping out ~50% of margin. The target is domestic import substitution – 60–65% of the Speciality market is currently imported; even at 2 lakh tonnes, market share would be only 45–50%. (Pranav Bansal)

Capex Discipline & Demand Environment

• Question: How do you avoid excess capacity risk if infra growth slows? (Jay Patel)
• Answer: More than 50% of equipment is manufactured in-house, so new capacity can be added in ~6 months. The company starts each year with only 20–25% excess capacity and caps annual capex at ₹200–250 crore; no outsized capex except Speciality. (Pranav Bansal)
• Question: Has demand improved across all sectors? (Vinil Shah, Dalal & Broacha)
• Answer: Demand is back in almost all sectors; automotive remains strong and exports are doing well. B2C and Speciality are adding volumes, though Q2–Q3 are seasonally weaker for infra. (Pranav Bansal)

Sanand Land Monetisation

• Question: Why is the balance Sanand land not classified as an asset held for sale? (Anil Shah, Dalal & Broacha)
• Answer: The Sanand facility is not for sale; a ~90,000-tonne wire expansion is underway there. Only some excess land may be sold. (Ghanshyam Gujrati, Pranav Bansal)

Key Takeaway

Bansal Wire Industries delivered a seasonally soft but disrupted Q1 FY27, with revenue of ₹1,168 crore (+25% YoY), EBITDA of ₹57 crore, and net profit of ₹20 crore, as West Asia-driven gas shortages inflated consumable costs; the company absorbed ₹5,000/tonne higher costs on committed orders, compressing EBITDA to ₹2/kg in the first 45 days before recovering to ₹7–8/kg from mid-May. B2C contributed ~10% of sales, Steel Cord received its first bulk trial order, and IHT/OHT capacity is ramping to 15,000 tpa with 80% approvals complete. Management reiterated ~20% volume growth for Q2–Q4 FY27, at least 20% EBITDA growth, ₹200–250 crore capex, and raised FY27–28 combined operating cash flow guidance to ~₹800 crore. Key watchpoints are persistently elevated gas costs, Steel Cord qualification timelines, and sustaining market share gains in an industry growing only 7–8%.