Bhagyanagar Ind

Bhagyanagar India Limited reported robust financial performance for H1 FY26, with revenue increasing to ₹1065 crores from ₹777 crores in H1 FY25, representing a 37.06% YoY growth. EBITDA more than doubled from ₹14.83 crores to ₹41.39 crores, leading to a significant EBITDA margin expansion from 1.92% to 3.88%. This improvement was primarily attributed to a strategic shift towards higher-margin value-added products and the removal of customs duty on copper scrap since January 31st of the previous year. PAT also saw substantial growth, rising from ₹7 crores to ₹25 crores.

The company's sales from value-added products currently constitute approximately 60% of total sales, with a target to increase this to 70% in the next 3 years and eventually up to 75% of volume. To support this, Bhagyanagar India is planning an additional 5,000 tons in overall capacity, with the majority of current capex directed towards enhancing value-added product capabilities. The company aims to achieve a ₹5,000 crore turnover within the next 7-8 years, driven by a compounded annual growth rate of approximately 20%.

Bhagyanagar India is diversifying into plastic and lead recycling, leveraging its existing infrastructure and international sourcing networks for copper scrap, which already includes plastic components. The plastic recycling plant is expected to go live in Q1 of the next financial year (FY27), while the lead recycling project is currently in the planning stages, targeting commissioning by the end of FY27. These new ventures are anticipated to be 'margin decorative,' as lower-value products like plastic and lead recycling typically yield higher EBITDA margins compared to copper.

The company's planned capital expenditure for FY26 is approximately ₹15 crores, increasing to ₹30 crores for FY27. Historically, capex has been funded through internal accruals and minor bank loans. For the upcoming plastic and lead recycling projects, the company is exploring fundraising options, including a potential equity raise of ₹100-150 crores, as current debt levels are considered optimal. The company maintains a comfortable debt-to-equity ratio of 2:1 for working capital, with long-term debt remaining very low (max ₹20 crores).

To manage the inherent volatility in copper prices, Bhagyanagar India employs a comprehensive hedging strategy across major exchanges (COMEX, LME, MCX). Additionally, the company operates on an automatic pass-through mechanism for both purchase and sale prices, linking them to LME rates, and avoids long-term fixed-price contracts. This approach ensures that fluctuations in raw material costs are directly reflected in sales prices, minimizing exposure to market swings.

Management is bullish on the growth of copper, projecting Indian demand to grow at 12-14% annually, double the GDP growth rate. Key drivers include green energy (solar and wind requiring 3.5x more copper), electric vehicles (4x more copper per car), and AI (estimated to increase global power demand by over 10%, translating to additional copper demand). The company emphasizes its 40-year legacy of uninterrupted profits and no payment defaults, positioning itself well to capitalize on these growth opportunities.