BMW Industries Q1 FY27 earnings call

BMW Industries reported a strong start to FY27, with operating income growing 11.6% year-on-year to INR 166.0 crores. Gross profit reached INR 112.7 crores, and the gross profit margin expanded significantly by 536 basis points year-on-year to 67.9%. Profit after tax (PAT) grew 25.8% year-on-year to INR 19.1 crores, with the PAT margin improving by 92 basis points to 10.8%. This performance was underpinned by healthy profit growth and improved utilization across downstream businesses.

Despite strong profit growth, operating EBITDA increased by a more modest 7.1% year-on-year to INR 33.7 crores, resulting in a margin contraction to 20.3% from 21.2% in Q1 FY26. This margin pressure was primarily attributed to a sharp increase in fuel prices stemming from the conflict in the Middle East. To mitigate future impacts of such volatility, management has initiated discussions with customers to incorporate gas prices into price variation mechanisms, aiming for greater stability in margins.

The new Bokaro plant is in a transitional phase, with capital drawdown already reflected in capital employed, but the plant is yet to be commissioned. The color-coated segment of the product offering is expected to be commissioned and capitalized in Q2 FY27, with hot trials currently underway. Management anticipates that the 150,000 tons line will take at least three to four quarters to ramp up fully, contributing to a total throughput of 0.5 million tons from Bokaro.

The company reiterates its ambitious guidance for a consolidated revenue CAGR of 70-75% and an operating EBITDA CAGR of 40-45% from FY25 to FY28. By FY28, EBITDA and PAT margins are expected to stabilize at 12-13% and 5-6% respectively. Looking further ahead, management aspires to achieve INR 4,000-4,500 crores in revenue from the new Bokaro plant by FY30, projecting a total company revenue of INR 5,000 crores within the next 3-4 years, including the legacy business.

The rolling mill business demonstrated robust performance, achieving an annualized capacity utilization of approximately 83.5%, driven by healthy demand. The pipes and tubes business operated at approximately 40.1% utilization in Q1 FY27, showing sequential production increases. Management expects utilization and throughput to improve further across both businesses, with a target of 65-70% stable state utilization for pipes and tubes by FY29.

BMW Industries maintains a disciplined approach to capital management, with net debt standing at INR 468.9 crores and a net debt-to-equity ratio of 0.57x. Long-term borrowings for the Bokaro project accounted for INR 202.4 crores of the net debt. The company successfully deployed INR 139.2 crores of internal accruals towards expansion, bringing the total capital deployed to INR 341.6 crores, supported by healthy and consistent operating cash flows.