Recommendation From Iron & Steel Sector

This section gives a recommendation of a stock having stock price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon


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Bharat Wire Ropes

HERE IS WHY

Integrated manufacturing facility

Diverse product mix

Healthy client list

Bharat Wire Ropes Ltd (BWR) is a Mumbai-based wire rope and wire manufacturing company. BWR is involved in manufacturing and sales of wire ropes, structural strands, slings and wires.

The company's products are used in varied industries such as general engineering, fishing, elevators, cranes, material handling, onshore/offshore oil exploration, ports and shipping and mining.

BWR also has a diverse product mix, which includes mechanically spliced slings, hand spliced slings, earth wires, stay wires, guy wires and spiral strands. BWR caters to a rich mix of clients ranging from overseas consumers, private players, entire Indian defence segment and government and semi–government organisations.

BWR is also engaged in the business of trading of steel-related products and has a steel wire ropes manufacturing facility with an installed capacity of 12,000 MTPA at Atgaon, Shahpur in Maharashtra.

BWR commenced its commercial production from March 22, 2017 at its wire rope manufacturing facility at Chalisgaon, Maharashtra. The new manufacturing plant will be one of the largest integrated plants that is expected to reap in benefits of economies of scale and improve its value proposition for customers. The new facility boasts of capacity of 78,000 metric tonnes per annum and will manufacture all kinds of wire ropes from 6 mm to 125 mm.

BWR's target export market will be Europe, China, Middle East and South Africa, etc. initially. The combined total capacity of Atgaon and Chalisgaon facility will be 78,000 MTPA. BWR has adopted latest technology and owns high speed machines from Germany, U.K. and Korea.

The gross revenue from operations for the quarter ended March 31, 2017 stood at Rs.22.20 crore, whereas the revenue for quarter ended December 31, 2016 stood at Rs.18.68 crore, reflecting a growth of 19 per cent. The revenues stood at Rs.13.95 crore for the quarter ended March 31, 2016.

The net profit after tax stood at Rs.54.99 lakh for quarter ended March 31, 2017 and for the quarter ended December 31, 2016, the net profit stood at Rs.42.39 lakh, thus reflecting a growth of 29.72 per cent. The net profit for the quarter ended December 31, 2016 stood at Rs.47.80 lakh.

The client list of BWR includes international companies as well as leading private sector companies in India such as Bajaj Auto, L&T, Reliance Industries, Tata Power, among others, as also some of the public sector players such as Indian Railways, BHEL, BEML and NTPC.

Looking at the key triggers such as the new manufacturing facility becoming operational and the expected economies of scale to be derived due to its large manufacturing facility, the revenues may grow in coming quarters and, thereby, help improve company's profitability. We recommend BUYING Bharat Wire Ropes with a long term perspective.