Bhagyanagar India Q1 FY27 earnings call

Bhagyanagar India Limited reported a robust Q1 FY27, with revenue exceeding ₹700 crores. The company achieved its highest-ever EBITDA margin of 5.43%, reflecting a 10.38% QoQ and 63% YoY growth, and a record PAT margin of 2.87%, up 14% QoQ and 84% YoY. Net profit for the quarter stood at ₹20 crores, marking a significant 167% increase from the previous year's first quarter.

Despite the strong financial results, sales volumes experienced a decline of 9.5% QoQ and 6.5% YoY, totaling 5,200 tons. This reduction was primarily attributed to trade route disruptions and material shortages experienced in April and May. However, management highlighted a strong recovery in June, with 2,200 tons of the total quarterly volume achieved in that single month, indicating a normalization of market conditions.

The company's strategic emphasis on value-added products yielded its highest share to date, comprising 63% of total sales, and contributed to a record EBITDA per kg of ₹72. Bhagyanagar India has successfully operationalized an additional 35,000 metric tons of capacity. New product introductions, such as transformer products and tin-coated bus bars for data centers, have seen strong demand, with approximately 600 tons supplied to data centers and 250 tons of tin-coated products.

A significant corporate restructuring is underway, involving the creation of Tieramet Limited as a wholly-owned subsidiary to house all copper business. Subsequently, Bhagyanagar Copper will merge with Bhagyanagar India, and Tieramet will be demerged. This initiative, with an NCLT hearing scheduled for August 7th, aims to unlock shareholder value and establish a more focused entity for the core copper business, while Bhagyanagar India will retain its land parcels and windmill project.

For FY27, the company has revised its volume growth guidance to 12-15%, down from an earlier 15-20% due to Q1 disruptions, but expects 15% growth from next year onwards. EBITDA margins are projected to stabilize between 5% and 5.5% for the rest of the year, with a long-term target of 5.4-5.5% by 2030. The value-added product mix is targeted to reach 63-64% this year and 69% over the next four years, supported by a planned 10,000-ton capacity expansion expected by June next year, contributing to a ₹5,000 crores revenue target by FY30.

The management has outlined a capital expenditure plan of ₹40 crores over FY27 and FY28, primarily for expansion. To support working capital and manage potential margin calls on MCX due to copper price volatility, the company is undertaking fundraising. The first round of ₹52 crores has been finalized and is expected in August, with a second tranche planned around March. Projected debt levels are expected to be between ₹300-350 crores by 2030, supported by strong cash flows.