Anand Rathi Upgrades Bansal Wire to Buy, Sets Rs 360 Target
Overview
Anand Rathi Research has initiated coverage on Bansal Wire Industries with a Buy rating and set a target price of Rs 360. The report highlights the company's ambitious expansion plans, including greenfield and brownfield projects at Sanand and Dadri, aiming to increase installed capacity by approximately 24% over the next two to three years. Despite minor revisions to EBITDA and APAT estimates due to increased depreciation and finance costs, the outlook remains positive, driven by focus on high RoCE segments.
Stocks Mentioned
Anand Rathi Research has initiated coverage on Bansal Wire Industries with a Buy rating and set a target price of Rs 360. The report highlights the company's ambitious expansion plans, including greenfield and brownfield projects at Sanand and Dadri, aiming to increase installed capacity by approximately 24% over the next two to three years. Despite minor revisions to EBITDA and APAT estimates due to increased depreciation and finance costs, the outlook remains positive, driven by focus on high RoCE segments.
Capacity Augmentation Plans
Bansal Wire Industries is poised for significant growth, planning to augment its installed capacity by nearly 24% to 0.77 million tonnes over the next two to three years. These expansions will occur at its Sanand and Dadri facilities, incorporating both greenfield and brownfield development. A recently commissioned 9,000-tonne specialty wire unit is expected to reach 40% utilization by FY26, with a 6,000-tonne OHT facility slated for commercialization by Q3FY27.
Product Development and Timelines
The company is advancing its product portfolio. Phase-I approval for steel tyre cord is anticipated from a key tyre manufacturer within the next two weeks, with Phase-II field trials to follow shortly. Commercialization of the steel tyre cord unit is projected for mid-FY27, with a slight delay of approximately one to two months attributed to a recent fire incident at the Dadri unit. The staggered commissioning of enhanced capacities over the next two years led analysts to trim EBITDA and APAT estimates for FY27/28 by 5.6%/8.1% and 12%/14% respectively, factoring in higher depreciation and finance costs.
Positive Outlook and Valuation
Despite the minor estimate adjustments, Anand Rathi maintains a positive outlook. The firm cites Bansal Wire Industries' comprehensive presence across the steel wire value chain, its strategic focus on high Return on Capital Employed (RoCE) segments, and management's guidance for surpassing Rs8,000 EBITDA per tonne. Consequently, the BUY rating is retained, with a target price of Rs 360, valuing the stock at 1.15 times its FY28 projected earnings on a PEG basis.
