💰 Financial Performance

Revenue Growth by Segment

The company reported significant improvement in total operating income during FY22 and stable growth in H1FY23. While specific segment-wise percentage growth is not detailed, the business operates in Copper (rods, pipes, sheets, foils) and Renewable Energy (Wind and Solar).

Geographic Revenue Split

Export sales contribute 15% of total revenue, while domestic sales account for the remaining 85%.

Profitability Margins

Net Profit Margin (NPM) declined sharply by 73.04%, falling from 3.20% to 0.86%. Return on Net Worth (RONW) also saw a significant drop of 55.05%, decreasing from 31.70% to 13.87%.

EBITDA Margin

The company targets a sustainable EBITDA margin of 4% (+/- 0.25%) over the next few years. Recent margin improvements were driven by a shift to higher value-added products and the removal of customs duty on copper scrap.

Capital Expenditure

Not disclosed in available documents; however, the company projected gross cash accruals of INR 12.01 Cr for FY23 to support its financial obligations.

Credit Rating & Borrowing

The company held ratings of CARE BBB; Stable (Long Term) and CARE A3+ (Short Term) for bank facilities totaling INR 106.00 Cr. These ratings were reaffirmed and subsequently withdrawn in March 2024 at the company's request.

⚙️ Operational Drivers

Raw Materials

Copper scrap and copper cathode are the primary raw materials, used to manufacture copper rods, pipes, sheets, and foils.

Import Sources

Approximately 40% of raw materials are imported, exposing the company to international price volatility and forex risks.

Capacity Expansion

Not disclosed in available documents; however, the company is focusing on increasing the volume of higher value-added products to improve margins.

Raw Material Costs

Raw material costs are highly volatile due to copper price fluctuations on the LME/MCX. To mitigate this, the company hedges 50% to 60% of its inventory on the MCX.

Manufacturing Efficiency

The company has maintained a track record of 40 years of uninterrupted profits, indicating high long-term operational consistency.

📈 Strategic Growth

Expected Growth Rate

4%

Growth Strategy

The company aims to achieve its growth targets by shifting its product mix toward higher value-added copper products. It also benefits from the removal of customs duty on copper scrap (effective January 31st), which reduces input costs and supports a target EBITDA margin of 4%.

Products & Services

Copper rods, Copper Pipes, Copper Sheets, Copper Foils, Power Cables, Wind Power generation, and Solar Power generation.

Brand Portfolio

Surana Group, Bhagyanagar India Limited (BIL).

New Products/Services

The company is focusing on expanding its portfolio of value-added copper products to sustain higher margins.

Strategic Alliances

The company operates with its 100% owned subsidiary, Bhagyanagar Copper Private Limited.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward value-added copper components. The company is positioning itself by moving away from commodity-grade products to specialized copper foils and pipes to capture higher margins.

Competitive Landscape

Operates in a highly competitive and fragmented copper industry characterized by inherent cyclicality.

Competitive Moat

The company's moat is built on its 40-year track record of uninterrupted profits and the established 'Surana Group' brand name, which provides reliability in a cyclical industry.

Macro Economic Sensitivity

Highly sensitive to global copper price cycles and industrial demand for copper in telecommunications and power sectors.

Consumer Behavior

Increased demand for specialized copper products in the power and telecom sectors is driving the shift toward value-added manufacturing.

Geopolitical Risks

Trade policies affecting copper scrap imports and customs duties are primary geopolitical/regulatory risks.

⚖️ Regulatory & Governance

Industry Regulations

The removal of customs duty on copper scrap (announced in the previous budget and effective from January 31st) is a key regulatory tailwind that has directly improved EBITDA margins.

Legal Contingencies

Secretarial audits for Bhagyanagar India Limited and Bhagyanagar Copper Private Limited for FY25 reported compliance with the Companies Act and SEBI regulations, with no major pending litigation values disclosed.

⚠️ Risk Analysis

Key Uncertainties

Volatility in copper prices and forex fluctuations are the primary uncertainties, with a potential impact on profitability margins which recently saw a 73.04% decline in NPM.

Geographic Concentration Risk

Operations are primarily based in Hyderabad, Telangana, with 15% of revenue derived from international markets.

Third Party Dependencies

40% dependency on imported raw material suppliers.

Credit & Counterparty Risk

The company maintains a current ratio of 1.54x and has unutilized working capital limits of approximately 40%, suggesting strong counterparty liquidity.