ValuePickr Forum

BAJAJ STEEL INDUSTRIES LTD - Proxy on Agri Theme

Bajaj Steel Industries Limited (BSL), Nagpur, India, established in 1961, is a public limited company, listed on Bombay Stock Exchange. The company is having world class engineering setup in its various plants situated in and around Nagpur.

BSL is the largest and modern Cotton Ginning and Pressing Plant & Machinery Manufacturer in India. With over five decades of experience and expertise, the company is having world class engineering facilities with diversified sectoral presence.

The company manufactures/sells throughout the world machineries/system of Cotton Ginning, Cotton Conveying, Cotton Cleaning, Cotton Bailing Presses, Delinting and Decorating Machineries, Humidification Systems, Power Transmission Products, Pre - Engineered Buildings, Electrical Panels, Firefighting Systems, Specialty Conveyor, Hydraulics Equipment, Master Batches etc.

The company is serving the Ginning and Pressing Industries worldwide and has been well recognized for its quality and is the only company in the world producing machineries for all the Four Ginning Technologies used in the world viz. Single Roller, Double Roller, Rotobar and Saw Gin and all the Pressing Technologies viz. Down packing, Up packing & Horizontal packing.

The Machineries/equipment’s manufactured under technical collaboration with M/s. Continental Eagle Corporation USA by us, are well accepted all over the world and the company has supplied such machineries/equipment to various advance countries such as Australia, Greece, USA, Uzbekistan, etc. apart from substantial supplies to Africa.

BSL has also tapped the new markets such as Argentina, Brazil, Sudan, Benin and other West African countries for enhancing growth of its products and has expanded its Electrical Panels division and have commenced its Manufacturing at New Plant at Plot No. XI-73, MIDC Industrial Area, Hingna, Nagpur- 440028 for manufacturing various Electrical Panels including PCC Panels, MCC Panels, APFC Panels, IMCC Panels, Drive Panels, PLC & SCADA Panels, AMF Panels, Synchronization Panels, Control Panels, Lighting Panels, Power Distribution Boards, Customized Panels and Panel Cabinets and these panels are being well received in the India and abroad.

Further, the pre engineered steel buildings division has also been expanded and getting good response within and outside India.

The growth potentials of both these divisions are high.

The Company is also successfully involved in the business of Pre-Fabricated Buildings (PEB) and executed more than 250 Steel Building projects (Domestic and Export). The Company has in-house Design & Engineering Capabilities to reach new frontiers of technical excellence.

The Company is providing different solutions for different purposes such as Pre-Engineered Buildings, Pre-fabricated Buildings, PEB Industrial Shed, Pre-fabricated School Buildings, Prefabricated Warehouse, Structures, Agricultural Buildings, etc.

SUPERPACK division, is a leading Manufacturer and Supplier of wide range of Master batches having well equipped production facility with well-versed quality section which help the company to deliver consistently high-quality product to the customer at the most competitive price.

Superpack Division is into the production of various kind of Master batches having proven range of master batches for various applications like especially for HDPE & PP tapes, Injection & blow molded items lamination of woven fabrics, non-woven fabrics etc. TiO2, UV & elastomer based master batches. All grades are well accepted & adopted by various plastics processing industries.

The Company is also expanding its activities in the selling of complete fire-fighting systems including Fire extinguishers, Hydrant systems, Sprinkle systems and Fire Diversion Systemsand Steel Doors etc.

The strong vision and dedication of the management and employees has put the Company as one of the biggest manufacturers of Cotton Ginning and Pressing Machineries with distinction of having *only company in the world with capa

bilities for manufacturing Cotton Ginning Machines for all the four major cotton ginning technologies being used in the world and enjoying substantial of the market share in India while rapidly expanding in the other cotton growing countries of the world.*

The company also undertakes turnkey projects including civil in its area of operation.

BSL’s wholly owned subsidiary company i.e Bajaj Steel Industries (Uganda) Limited has completed the project of Cotton Development Organization for Phase -III also in Cotton Seed Processing Plant at Pader District in Uganda. The prospects for the current year are encouraging.

The Company is also trying to increase the revenue from other segments such as PEB, Electrical Panels, Fire Fighting Equipment’s and Specialty Conveyors etc.

The company has been diversifying into different products to mitigate the risks and to grow in the business.

The company with well diversified product mix within capital goods category products where it earn 75% of its revenue and the rest is contributed by growing Superpack division, is having small equity capital of just 2.35 crore where promoters hold 36%, 20% is held in physical form with individual shareholders, 12% held by promoter group company, 2.3% with IEPF Fund, leaving low floating stock in the market, With trailing twelve months sales of 380 crores and Net profit of 21 crores giving an EPS of 59 per share. is trading at a PE of just 3.56, while industry PE for capital goods company is 40. The company is regular dividend paying company since year 2007. With improving sales and profit over the last few years, the financial position of the company is becoming very strong which can be seen from improving ROE which stands at 18.39% and RoCE of 21.25%, BSL is one of the few capital goods company whose sales and profit are rising even during slowdown of last couple of years and even during lockdown, which can be seen in June quarter numbers.

At CMP the company is available at Market cap TO Sales of only 0.20, which is undervalued by any standard. Debt to equity is 0.68 and Debtor days are 54.

With revival of rural economy, backed by bumper sowing of cotton crops coupled with anti-china sentiment and support of Governments Atmanirbhar Bharat campaign to help local industry, the demand of the company’s product will improve sharply giving boost to its topline and bottomline.

With increase in import duty on textile and apparel from 10% to 20% and additional duty on fabrics from China and hongkong at the rate of USD 1.14 per metre will only increase cotton consumption in India which will immensely benefit the company, as it’s one of the leading cotton ginning and processing machinery supplier.

Promoters recently subscribed preference shares at Rs 107 and increase their stake by 10%. Company is reducing the debt and will be debt free in next few years.

3 Likes

I have been tracking this from 130 odd levels and since then it has almost gone up by 50%. Available at attractive valuations.

Thanks hemangi… this looks like a seriously good find. Technically it is trading near its resistance from 2 + years ago too and it then hit a double bottom and is now trying to break that all time high resistance. Will be watching it intently to see if it does manage to break it. Cheers. Interestingly in the last major recession it rose instead of crashing so looks a good bet in current times.

1 Like

Does it look good as a medium term bet as per agri theme playing ? As applying technical looks good since agri & steel tailwinds plus breakout from all time highs? Specifically trading from technical view how does or one will plan exit?


Was going through their website. Everything looked fine until I clicked on achievements and all they had there was dummy text from August 2018. This is in their main about us page. Maybe online isn’t their priority but this is a bit low standard from anyone tbh

1 Like

Is it related to Bajaj Family

Mukand, Bajaj electrical group

This is the list of Rahul Bajaj related entities https://en.wikipedia.org/wiki/Bajaj_Group

Bajaj Steel Industries is not present in it.

Below is the link mentioning promoters of BSI. They are not present as part of the family tree of Rahul Bajaj. So, fair to assume that they are not related.
https://trendlyne.com/equity/share-holding/2351/BAJAJST/latest/bajaj-steel-industries-ltd/

1 Like

To understand exact products driving growth and their sustainability I pulled out below details from Annual Reports. Primarily Bale Press Machine, Saw Gin Equipments, Electrical Panel and PEB are driving growth since past few years. Out of which Bale Press Machine and Saw Gin Equipments are related to cotton industry and had huge incremental revenue. Important question to ask are these revenue and revenue growth sustainable ? @hemanghigandhi would like your inputs on the sustainability of the revenues and revenue growth in future for the above products.

Finished Goods: 2020 2019 2018 2017 2016 2015
a) DR Gin 21 31 16 25 29 43
b) Bale Press Machine 55 42 12 21 28 27
c) Auto Feeder 4 5 4 6 7 11
d) Automation Parts 24 34 19 30 44 48
e) Master Batches 60 77 72 78 102 142
f) Others 193 112 106 66 121 87
TOTAL 357 303 230 227 330 358
Others 2020 2019
Pre Engineered Building 22 18
Electrical Panel 26 9
Saw Gin Equipments & Parts 142 68
Delinting Equipments & Parts 3 2
Rotary Knife Equipments & parts 0 15
Spare Parts and others 17.7 20.17

source:Annual reports

1 Like

Akshay,

Some old shareholders are selling as they want to take exit. Once their selling is over you will see better price. Regarding exit, you may hold for few years.

1 Like

Sahil,

Cotton processing machinery will be major revenue earner alongwith master batch division, PEB will grow once economy is out of recession. Company is also diverting to other industrial products as mentioned in the note above.

Recent imposition of additional duties on over 300+ textile items and doubling of import duty on garment will increase cotton consumption in India benefitting the company.

2 Likes

Hi,

I also started following this name in last few days. The demand for their product seems to be driven by cotton demand/supply situation globally and not just India.

I found above estimates on global cotton production. Might be helpful.

Disc - Not invested.

1 Like

Cotton sowing area doubles to 92 lakh hectares

Last season, farmers had completed sowing operations on 46 lakh hectares around the same period. Cotton sowing is expected to cross 115-120 lakh hectares for the 2020-21 season, according to industry bodies.

HG

1 Like

https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/Bajaj_Steel_Industries_Limited_September_30_2020_RR.html#:~:text=Rating%20Action&text=CRISIL%20has%20upgraded%20its%20ratings,of%20high-margin%20export%20orders

Bajaj Steel Industries Limited
Ratings upgraded to ‘CRISIL A-/Stable/CRISIL A2+’

Amit

Good chart, shows quite secular cotton production in the world. Question would be to find out the driving factors for such future growth ? Also, If such growth is there then definitely Bajaj Steel will one of the key beneficiaries and will lead not just earnings growth but PE re-rating as well.

Also, Stock price ATH yesterday with PE of just 4.34 which also seems to be median PE historically. Will there be strong PE re-rating and why historical PE was so low? Any thoughts @hemanghigandhi

1 Like

Bsil.pdf (6.3 MB) Good numbers standalone and consolidated

Thanks