Bansal Wire operations normalise as steel tyre cord trials support specialty growth

Investment View and Valuation

Anand Rathi Research maintained its BUY view on Bansal Wire Industries in its July 24, 2026 result update, citing normalising operations, volume growth potential, capacity expansion and a rising contribution from higher-return specialty products.

The broker raised its EBITDA estimates by 5.0 per cent for FY27E and 7.4 per cent for FY28E as pricing normalises and the earnings outlook improves. Anand Rathi values the company at 22 times FY28E P/E, unchanged from its Q4 FY26 valuation framework, to derive its Rs380 target price.

Operations Normalise After Gas Supply Disruption

Bansal Wire Industries faced operational disruption during the first half of Q1 FY27 because the Middle East conflict affected natural-gas supplies. Management indicated that gas prices rose about 1.5 times, while gas and consumable costs increased by about Rs5,000 per tonne.

The company absorbed higher raw-material costs for existing customers in the first half, taking EBITDA per tonne below Rs2,000. Operations and the cost structure were stabilised by mid-May 2026, and pricing revisions helped EBITDA per tonne return to around Rs7,000.

Anand Rathi notes that gas prices remain around 1.5 times their pre-conflict level, adding roughly Rs1,500 per tonne of blended cost. As a result, EBITDA per tonne may take time to sustainably exceed Rs8,000.

Q1 FY27 Financial Performance

Q1 FY27 sales volume rose 7.6 per cent year on year, although it declined 4.8 per cent quarter on quarter, to 111.9 thousand tonnes. Consolidated revenue grew 24.4 per cent year on year to Rs11.7 billion, in line with Anand Rathi's estimate, supported by a 15.6 per cent year-on-year increase in blended average selling price to Rs1,04,311 per tonne.

EBITDA and EBITDA per tonne were above the broker's estimates because other expenses of Rs210 million were lower than expected. APAT declined 47.9 per cent year on year to Rs205 million, compared with Anand Rathi's Rs165 million estimate.

Volume Growth and Capacity Expansion

Management expects around 15 per cent volume growth in FY27 and retained its expectation of 20 per cent year-on-year volume momentum during the remaining nine months, although it cannot recover the Q1 FY27 volume loss. Anand Rathi estimates FY27 sales volume of around 520 thousand tonnes, up around 14 per cent year on year.

Capacity is expected to rise by an additional 120 thousand tonnes to 799 thousand tonnes in FY27E, including 60 thousand tonnes scheduled for commissioning in Q2 FY27. The broker estimates capacity of around 890 thousand tonnes by FY28E.

Anand Rathi believes FY27E utilisation of about 65 per cent leaves growth headroom. Effective utilisation above 75-80 per cent is operationally difficult in steel wire manufacturing because of wire diameter, product mix, length and drawing passes.

Specialty Products and Strategic Catalysts

Steel Tyre Cord Trials

The key strategic catalyst is Bansal Wire Industries' first trial order from a leading Indian tyre manufacturer for its 20 thousand tonne steel tyre cord vertical. The customer moved directly to product trials, but final commercial qualification requires several trial stages lasting around two to three months each and may take a few quarters.

Anand Rathi considers successful approval important because steel tyre cord and hose wire are largely import-dependent, and domestic commercialisation could command a premium.

IHT and OHT Wire Capacity

The company is commissioning 9 thousand tonnes of IHT wire capacity in FY27. Management expects break-even above 60 per cent utilisation and steady-state EBITDA of Rs10,000-Rs20,000 per tonne. The OHT wire facility remains on track for commercial commissioning in Q4 FY27.

B2C Expansion, Cash Flow and Key Risks

Management is expanding the B2C portfolio of farming, fencing and poultry steel wires. These products contributed around 10 per cent of Q1 FY27 sales, versus about 5 per cent earlier, and generate 20-30 per cent higher EBITDA per tonne than traditional B2B low-carbon sales.

Management has capped annual capex at Rs2-2.5 billion while targeting 20-25 per cent annual volume growth. It expects FY27E cash flow from operations of around Rs3.5-Rs4.0 billion.

Key risks identified by Anand Rathi include:

• Disruption to gas supplies.
• Lower steel prices.
• Delays in steel tyre cord approvals.