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BMW Industries — Q4 FY25 earnings call

Call held 19 May 2025

Management summary

BMW Industries reported a strong Q4 and full-year FY25 performance with significant revenue and EBITDA growth. The company is undergoing a strategic transformation, including a major greenfield investment in Bokaro for coated and plated steel, for which it has qualified under the PLI 1.1 Scheme. While margins are expected to moderate with the new business model, the company projects robust CAGR for revenue, EBITDA, and PAT over the next three fiscals, driven by phased capacity expansion and value chain integration.

Highlights

Q4 FY25 Revenue stood at INR 157 crores, reflecting a 14.4% YoY growth.
Full Year FY25 Revenue reached INR 629 crores, up 5.1% from the previous year.
Q4 FY25 Operating EBITDA was INR 33 crores with a margin of 21.2%.
Full Year FY25 Operating EBITDA was INR 147 crores with a margin of 23.4%.
Q4 FY25 Profit After Tax (PAT) was INR 17.6 crores, translating to a PAT margin of 10.9%.
Net Debt as of March '25 stood at INR 120 crores, up from INR 99 crores in FY '24.
Cash Conversion Cycle improved significantly to 56 days in March '25 from 96 days in March '24.
Board recommended a final dividend of 0.43 rupees per share.

Key financials

3 periods

Headline

Net Debt
₹120 Cr
Cash Conversion Cycle
56 days
Cash and Cash Equivalents
₹41 Cr
Net Cash Flow From Operating Activity
₹125 Cr

Q4 FY25

Revenue
₹157 Cr
YoY +14.4%
Operating EBITDA
₹33 Cr
Operating EBITDA Margin
21.2%
PAT
₹17.6 Cr
PAT Margin
10.9%

FY25

Revenue
₹629 Cr
YoY +5.1%
Operating EBITDA
₹147 Cr
Operating EBITDA Margin
23.4%
PAT
₹75 Cr
PAT Margin
11.8%

What they filed

Q1 FY27: revenue up 12.2%, net profit up 26.7% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	150	147	157	148	145 −3%	162 +10%	209 +33%	166 +12%
Expenses	115	111	123	117	107	123	152	132
EBITDA	35	36	34	32	37 +6%	39 +8%	58 +71%	34 +6%
Margin	23%	25%	21%	21%	26%	24%	28%	20%
Other income	3	1	4	5	2	2	6	11
Interest	4	4	2	4	5	5	5	6
Depreciation	9	11	13	13	13	14	12	14
Profit before tax	25	22	23	20	21 −16%	21 −5%	47 +104%	25 +25%
Tax rate	28%	22%	25%	25%	27%	17%	29%	24%
Net profit	18	17	18	15	15 −17%	18 +6%	33 +83%	19 +27%
EPS	0.80	0.77	0.78	0.68	0.68	0.78	1.48	0.85

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

qualitative confidence

Composition

Long-term contracts with key customer (contract type)
GP/GC sheet agreement (contract type)
Long-term contract with Tata Steel (contract type)

The company has successfully renewed and finalized long-term contracts, providing revenue visibility through FY29.

Source: Prepared remarks

Capital allocation

high confidence

Capex ₹803 Cr
- Greenfield investment in Bokaro for downstream processing and manufacturing of coated and plated steel ₹803 Cr
Lastly, in a decisive step, the company has initiated a greenfield investment in Bokaro, focused on downstream processing and manufacturing of coated and plated steel. With a total investment of INR 803 crores over the next 24 months, Phase 1 of the facility is expected to be operational by the end of FY '26.
Debt Net ₹120 Cr
- New borrowing Increase in long-term borrowings to support ongoing capacity expansion.
Net Debt as of March '25 stood at INR 120 crores, up from INR 99 crores in FY '24, primarily driven by an increase in long-term borrowings to support ongoing capacity expansion.
Dividend ₹0.43/share (final)

We are also delighted to announce that the Board has recommended a final dividend of 0.43 rupees per share, subject to shareholder approval.
Liquidity Cash ₹41 Cr Cash Conversion Cycle improved significantly to 56 days in March '25 from 96 days in March '24, driven by disciplined working capital management.

Notably, our Cash Conversion Cycle improved significantly to 56 days in March '25 from 96 days in March '24. This improvement was driven by disciplined working capital management.

Guidance & targets

Revenue

Consolidated Revenue CAGR Revenue · next 3 fiscals (up to FY28) · High confidence 75%

Over the next 3 fiscals, we anticipate consolidated revenue to grow at a CAGR of approximately 75%, driven by the phased commissioning of the Bokaro greenfield project and our organic growth.

— Harsh Bansal
Existing business top line (Pipes and Tubes ramp-up) Revenue · Medium confidence INR 850 crores

The top line, like I just mentioned to the caller before you, if the only place where we are left to ramp up is the pipes and tubes, if that ramps up to the capacity, we expect maybe INR 850 crores or thereabout.

— Harsh Bansal

Profitability

Operating EBITDA CAGR Profitability · next 3 fiscals (up to FY28) · High confidence 45%

Operating EBITDA is expected to grow at a CAGR of 45% over the same period with the Operating EBITDA margin stabilizing at 11% by FY '28 as we progressively integrate the new and existing business lines.

— Harsh Bansal
PAT CAGR Profitability · next 3 years · High confidence 40%

While margins may normalize, the top line is set to expand materially and PAT is expected to grow at a robust 40% CAGR over the next 3 years with a PAT margin expected to stabilize at around 5% by FY '28, resulting in a Return on Capital Employed of over 18%.

— Harsh Bansal

Margin

Operating EBITDA Margin Margin · by FY28 · High confidence 11%

Operating EBITDA is expected to grow at a CAGR of 45% over the same period with the Operating EBITDA margin stabilizing at 11% by FY '28 as we progressively integrate the new and existing business lines.

— Harsh Bansal
PAT Margin Margin · by FY28 · High confidence 5%

While margins may normalize, the top line is set to expand materially and PAT is expected to grow at a robust 40% CAGR over the next 3 years with a PAT margin expected to stabilize at around 5% by FY '28, resulting in a Return on Capital Employed of over 18%.

— Harsh Bansal
Existing business EBITDA margins Margin · mid-term · High confidence 23-24%

So as indicated in the past, the EBITDA margins on the existing business will be around 23% to 24%. That's a stable state.

— Harsh Bansal

Return on Capital

Return on Capital Employed Return on Capital · by FY28 · High confidence 18%

While margins may normalize, the top line is set to expand materially and PAT is expected to grow at a robust 40% CAGR over the next 3 years with a PAT margin expected to stabilize at around 5% by FY '28, resulting in a Return on Capital Employed of over 18%.

— Harsh Bansal

Capex

Bokaro Greenfield Project Phase 1 Operationalization Capex · by end of FY26 · High confidence Operational

With a total investment of INR 803 crores over the next 24 months, Phase 1 of the facility is expected to be operational by the end of FY '26.

— Harsh Bansal

Project Returns

IRR for 700,000 MT capacity expansion Project Returns · High confidence 25% plus

So we expect IRR of 25% plus and a payback not exceeding maybe 5 years.

— Harsh Bansal
Payback Period for 700,000 MT capacity expansion Project Returns · High confidence not exceeding 5 years

— Harsh Bansal

Finance Cost

Finance Cost Finance Cost · next quarters · High confidence INR 3-4 crores

Previously INR 1.3-1.4 crores → INR 3-4 crores

So I think it will surely increase to reflect the borrowings. This is also lower because of certain paybacks that we have completed in Quarter 4, certain debts which have been paid back and new loans which have been taken are still low. ... No, no, it will not be INR 1 crore. It will be similar to the previous quarters. ... Yes. Yes.

— Harsh Bansal

What to watch in Q1 FY26

Bokaro Greenfield Project Phase 1 Operationalization

by end of FY26

Current Under construction

Target Operational

Why it matters

Successful commissioning of Phase 1 is crucial for realizing the projected revenue and EBITDA growth from the new business model.

With a total investment of INR 803 crores over the next 24 months, Phase 1 of the facility is expected to be operational by the end of FY '26.

Risks & concerns

PAT margin contraction due to higher finance costs with increased debt
medium

Finance cost for Q4 FY25 was INR 1.3-1.4 crores, but is expected to increase to INR 3-4 crores in subsequent quarters due to new borrowings for capacity expansion, impacting PAT margins.

Analyst acknowledged
Volatility of the steel sector
medium

The company's value addition model helps navigate the inherent volatility of the steel sector, maintaining steady cash flows and operational resilience.

Management mitigated
Moderation in operating EBITDA margin due to trading activity
low

Q4 FY25 operating EBITDA margin moderated to 21.2% from 24.5% in Q3 FY25, primarily due to INR 12.5 crores revenue from HR, CR, GP coil trading which generated negligible margins.

Management acknowledged
Raw material cost becoming a significant input for new business
low

For the Bokaro project, raw material costs will comprise over 80% of revenue, but management states that input variations are largely transferable to customers in this sector.

Analyst downplayed

Q&A highlights

7 direct

Interpretation of 75% Revenue CAGR guidance Direct

No, no. It is a phased expansion. So it will happen at we are doing like the first phase is only the Color Coated Segment. So what is happening is we are starting with the highest value add and going backwards, right, as we expand. We are talking of a CAGR here. So it will -- the revenue growth will be staggered over the next 3 years, as will be the expansion.

Clarifies that the aggressive revenue CAGR is due to phased expansion of new projects, not a uniform annual growth rate, providing context for future revenue recognition.

Asked by Jev Mehta

Impact of Bokaro project on PAT margins and commoditization Partial

Not really. I'll tell you why. We are not getting into the upstream production of steel. It is all downstream and highly value-added services, which we are offering the product. So we are not going to be -- of course, our raw material cost is becoming an input, which hitherto has not been an input. But beyond that, I don't see it to be a significant fluctuation. ... And Mehta, just to further clarify to what Sanjeev ji said, in this sector, most of the input variation is transferable to the customers. So there is very little component that one has to absorb when you're talking about value-added.

Addresses concerns about PAT margin contraction and commoditization with the new Bokaro project, explaining that the value-added nature of the products and transferability of raw material costs will mitigate these risks.

Asked by Jev Mehta

Suggestion to fund Capex via Equity instead of Debt Direct

I very well appreciate that suggestion, Bhavesh ji. We will take it into active consideration. Thank you so much. ... But otherwise also, if you look at in spite of the expansion, our Debt to Equity is not crossing 0.6 at any point in time in spite of that.

An analyst suggested equity issuance to reduce debt burden for the large Capex. Management acknowledged the suggestion and highlighted that current debt-to-equity ratios remain conservative even with expansion.

Asked by Bhavesh

Update on GP/GC sheet agreement and Tata Steel long-term contract Direct

Ma'am, we had a disclosure a few weeks back where it was signed. That has been signed, yes, up to FY '29. And I also mentioned it in my opening remarks. ... Yes, it has already been finalized.

Confirms the signing of the GP/GC sheet agreement and finalization of the long-term contract with Tata Steel, providing clarity on key business agreements.

Asked by Ronak Ostwal

Change in capacity expansion plan (1 million to 7 lakh tonnes) Direct

So we will revisit it as and when the time comes. But as of now, we are sticking to the 700,000 number.

Confirms the revised capacity expansion target of 700,000 tonnes, indicating a more conservative approach but with potential for future revisit.

Asked by Ronak Ostwal

Optimum Revenue potential at 60-70% utilization for Pipe and Tube capacity Direct

So in the existing business, we have seen a moderate improvement in these numbers because the ramp-ups on the Tubes division is happening. But of course, they are not as much as we would have liked them to be. We do hope that this business will continue to show improvement of ROCE and ROE over the next FY as well.

Analyst inquired about the revenue potential of existing capacity. Management indicated moderate improvement in the Tubes division ramp-up and expects continued improvement in ROCE/ROE.

Asked by Kriya Agarwal

Clarification on PAT margin for existing vs new business Direct

So these are essentially different businesses. While in the current business, I don't have any raw material cost, and they are largely provided by the customer. I do have some raw material, but not very major. In the Bokaro business, about 80% of my cost will comprise from raw materials. So fundamentally, there are two different businesses. And therefore, when you measure PAT as a percentage of sales, it will, of course, change.

Clarifies the difference in business models between the existing value-added conversion business (higher margin, less raw material exposure) and the new Bokaro project (lower margin, high raw material exposure), explaining the expected PAT margin normalization.

Asked by Madhur Rathi

PLI benefits for Bokaro Capex Direct

That's right. Like I mentioned, we have been registered for the Ministry of Steel's PLI 1.1 Scheme. And we will be hoping we're able to get those.

Confirms the company's registration under the PLI 1.1 Scheme for the Bokaro project, indicating potential for government incentives.

Asked by Madhur Rathi

2 min read 6 chapters

Detailed narrative

Q4 FY25 and Full Year Performance Overview

BMW Industries reported a Q4 FY25 operational revenue of INR 157 crores, marking a 14.4% year-on-year growth. For the full fiscal year 2025, revenue reached INR 629 crores, an increase of 5.1% from the previous year. Operating EBITDA for Q4 stood at INR 33 crores with a margin of 21.2%, while the full-year operating EBITDA was INR 147 crores with a margin of 23.4%. Profit After Tax (PAT) for Q4 was INR 17.6 crores (10.9% margin), contributing to a full-year PAT of INR 75 crores (11.8% margin).

Strategic Transformation and Bokaro Greenfield Project

The company is undergoing a significant transformation, expanding its value chain beyond traditional value-added steel conversion. A key initiative is the INR 803 crores greenfield investment in Bokaro for downstream processing and manufacturing of coated and plated steel, with Phase 1 expected to be operational by the end of FY26. This project has qualified under the Government of India's PLI 1.1 Scheme, reinforcing its strategic importance and potential for incentives.

Margin Dynamics and Trading Activity Impact

The operating EBITDA margin saw a moderation in Q4 FY25 to 21.2% from 24.5% in Q3 FY25. This was primarily attributed to INR 12.5 crores in revenue from HR, CR, and GP coil trading, an activity undertaken to gain market insights for the Bokaro project, which generated negligible margins. Excluding this trading activity, the adjusted core business EBITDA margin would have been approximately 23%, with core business revenue at INR 145 crores.

Capital Allocation and Debt Profile

Net Debt as of March '25 increased to INR 120 crores from INR 99 crores in FY '24, driven by long-term borrowings for capacity expansion. The company plans to fund approximately INR 500 crores of the INR 803 crores Bokaro project through debt, while maintaining a conservative Debt to Equity ratio below 0.6. Finance costs are expected to rise from INR 1.3-1.4 crores in Q4 to INR 3-4 crores in subsequent quarters due to increased borrowings.

Future Outlook and Long-Term Guidance

BMW Industries projects robust growth over the next three fiscals (up to FY28), with consolidated revenue expected to grow at a CAGR of 75%, Operating EBITDA at 45% CAGR, and PAT at 40% CAGR. Operating EBITDA margin is expected to stabilize at 11% and PAT margin at 5% by FY28, reflecting the shift to a more input-intensive business model. The 700,000 metric ton capacity expansion is projected to yield an IRR of over 25% and a payback period not exceeding 5 years.

Operational Efficiency and Shareholder Returns

The company demonstrated improved operational efficiency, with the Cash Conversion Cycle significantly improving to 56 days in March '25 from 96 days in March '24, attributed to disciplined working capital management. The Board has recommended a final dividend of 0.43 rupees per share, subject to shareholder approval, reflecting a commitment to shareholder returns.

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