Reviews

In this edition, we have reviewed BMW Industries Ltd and Styrenix Performance Materials Ltd. We suggest our reader-investors to HOLD BMW Industries Ltd and Styrenix Performance Materials Ltd 

We had recommended BMW Industries Ltd (BMWIL) in Volume 39, Issue No. 20 dated August 26, 2024—September 8, 2024, under the 'Low Price' segment. The recommended price for the stock was `70.90. We had recommended the stock on the basis of rising consumption, strong demand, and investments. 

BMW Industries Limited, a public limited company based in Kolkata, West Bengal, was established in 1981. With over three decades of steel processing experience, the company has become a significant industrial group. It manufactures two types of products: longs (structures and TMT) and flats (pipes, galvanized and plain coils, cold rolled sheets, plain galvanised sheets & corrugated galvanised sheets), catering to customers in the construction, automobile, and consumer durable sectors. The company's primary business area is manufacturing, processing, and selling steel products, engineering, and related products and services. 

In Q3FY25 on a consolidated basis, revenue increased by 2.54 per cent YoY to ₹147.59 crore compared to ₹143.93 crore from the previous year's same quarter. On a sequential basis, revenue decreased by 1.77 per cent. Net profit stood at ₹17.19 crore compared to ₹11.52 crore, a YoY increase of 49.3 per cent, while sequentially it decreased by 3.52 per cent from ₹17.82 crore. At TTM, the company's shares are trading at a PE of 13.7 times, which is lower than its industry PE of 22.6 times. If we look at its PBV, it is currently at 1.49 times, which is lower than the industry PBV of 2.20 times. The company has a three-year average return on equity (ROE) of 8.38 per cent and a return on capital employed (ROCE) of 10.9 per cent. 

BMWIL is poised for robust growth through a multi-pronged approach, including expansion of production capacity for pipes and tubes at Kolkata and Jamshedpur facilities. This aligns with the Indian steel industry's growth forecast due to rising per capita consumption and demand from sectors like construction, infrastructure, and automobiles. The company's focus on value addition and long-term contracts offers predictable revenue streams. Investment in logistics and warehousing infrastructure enhances operational efficiency. The company's financial stability, low net debt-to-equity ratio, and consistent dividend payout policy demonstrate its financial discipline. Hence, we recommend Hold. 

We had recommended Styrenix Performance Materials Ltd in Volume 39, Issue No. 21 dated September 9, 2024—September 22, 2024, under the 'Choice Scrip' segment. The recommended price for the stock was ₹2,617.50. We had recommended the stock on the basis of expansion, efficiency improvement and increasing market share. 

Styrenix Performance Materials Ltd, established in 1973, is a leading manufacturer and exporter of Engineering Thermoplastics, including Absolac (ABS) and Absolan (SAN) in India. ABS, a plastic resin made from acrylonitrile, butadiene, and styrene, is used in various industries like home appliances, automobiles, consumer durables, and machinery. The company also manufactures Polystyrene, used in food service, packaging, refrigerator components, and electronic goods housings. The company has a production unit in Gujarat with an installed capacity of approximately 100,000 MTPA of ABS and 78,000 MTPA of polystyrene. 

In Q3FY25 on a consolidated basis, revenue increased by 42.52 per cent YoY to ₹690.79 crore compared to ₹484.68 crore from the previous year's same quarter. On a sequential basis, revenue increased by 5.75 per cent. PBIDT excluding other income increased by 27.88 per cent to ₹74.03 crore YoY as compared to ₹57.89 crore from the previous year's same quarter, while sequentially it decreased by 25.08 per cent. Net profit stood at ₹47.69 crore compared to ₹34.94 crore, a YoY increase of 36.49 per cent, while sequentially it decreased by 31.97 per cent from ₹70.1 crore. 

At TTM, the company's shares are trading at a PE of 20.4 times, which is higher than its industry PE of 18 times. If we look at its PBV, it is currently at 5.78 times, which is much higher than the industry PBV of 1.94 times. The company has a three-year average return on equity (ROE) of 28.4 per cent and a return on capital employed (ROCE) of 36.3 per cent. 

Styrenix has acquired a 100 per cent stake in Ineos Styrolution (Thailand) Co., Limited, aiming to leverage synergies with the Indian business. The Thai facility has rubber, ABS, and SAN capacities. The company expects similar capacity utilization levels in Thailand and India over time. Debottlenecking activities were completed last quarter, and rubber capacity at the Nandesari plant increased to 27 KT. The company plans to add 50 KT capacity in ABS by mid-2026. Despite global spread challenges, Styrenix is confident in maintaining healthy spreads in the Indian market. Hence, we recommend Hold. 

(Closing price as of April 09, 2025)