BKT is good quality business and growing at decent clip. more the recession in global market more it helps this company strengthen its competitive MOAT. This is one off the road company investing when others are scaling back. In the long run BKT is gonna reap rich dividends due to this MOAT.
One observation is …In the past many years significant role is played by financial leverage to the ROE of BKT. If you take out leverage then ROE may fall to just about cost of capital or slightly above. This makes sense if you understand that the business is very very capital intensive. But the management is so far clever in using leverage to grow the business. Their bets so far have played out.
The prices of commodity input have fallen and that should help improve profits. Something this company needs in large quantity to pay back the huge loan taken to expand the capacity.
One significant red flag is corporate governance- attitude of promoters. The family has gifted themselves almost Rs 60 Cr this year as compensation. This is after the fact that they hold almost 55-60% share in this 6000 Cr plus market cap company. Talk about the greed!!! Rest of the outside board members and management get pittance in comparison. Only divine few are blessed.
The competency and track record - Super.
Integrity and shareholder friendliness - ?
Disclosure- I am invested in BKT for many years.