Bhagyanagar India Ltd Q3 FY2026 Concall Summary

Key Takeaways

• Preponed ₹5,000 cr ambition: The copper business now targets FY28-29, pulled forward from 2030, after 9-month turnover already exceeded full FY25.
• Margins more than doubled: 9-month EBITDA grew 172% YoY to ₹70 cr, with Q3 alone hitting 4.9%; management is pushing to cross 5% in coming quarters.
• De-merger unlocks structure: Copper moves to Tieramet Limited; land and windmills stay in Bhagyanagar India. Every shareholder gets one Tieramet share, expected in FY26-27.
• Value-added pivot is working: EBITDA per kg jumped from ₹19 to ₹37, driven by rejecting low-margin commodity sales and adding products like silver-plated bus bars for AI data centers.
• What to watch next quarter: Whether the promised "best quarter ahead" materializes, the pace of margin expansion toward 5%, and any concrete progress on the joint development agreement for real estate.

De-merger & Structure

• Two-entity split: Copper business (including all consolidated balance sheet assets) moves to a new company, Tieramet Limited; Bhagyanagar India retains only land parcels and windmills, with a book value of roughly ₹30 cr and zero debt. [12-13]
• Shareholder entitlement: Every Bhagyanagar India shareholder receives one share of Tieramet; the scheme balance sheet is available on the company website.
• Timeline: Demerger expected in FY26-27, though no specific quarter is committed.
• Rationale: The separation isolates the copper growth story from the real estate and wind energy portfolios, which management is now actively working to monetize.

Management: "To keep it very simple, everything which is there in Bhagyanagar India today, in the consolidated balance sheet, will move to the, Tieramet, the new company. What will be left out in, the old company, that is Bhagyanagar India, will be the land parcels and the windmills." [12-13]

Growth & Demand Drivers

• Revenue trajectory: 9-month turnover of ₹1,643 cr already exceeds full FY25 turnover of ₹1,625 cr, with roughly 35-40% growth expected for the current year.
• ₹5,000 cr target preponed: Originally set for 2030, the target is now FY28-29, driven by demand from AI, EV, and green energy, each of which requires multiples more copper than conventional applications.
• Growth composition shift: Until last quarter, growth was mostly volume-driven; going forward, higher copper prices will also contribute to top-line expansion.
• Capacity expansion: Installed capacity expected to reach 35,000 metric tons per annum by end of February, supporting the growth trajectory.
• EU FTA opens new markets: The EU Free Trade Agreement has come into effect, and the company sees potential to export to Europe for the first time, leveraging MNC customers' Indian subsidiaries to reach their parents globally.
• Scrap sourcing confidence: Management believes it will not have a problem sourcing ₹5,000 cr worth of scrap given global reputation and relationships; the company is now in a position to choose sources across South America, North America, Europe, Middle East, Southeast Asia, and Australia.

Devendra Surana: "Earlier, we were looking at reaching a turnover of 5,000 crores by the year 2030, but seeing the demand, we have preponed it to 28-29 now, so our target is to reach a 5,000-crore turnover by 28-29, looking at the demand and the growth which is happening in the market."

Margin Progression & Profitability

• EBITDA surge: 9-month EBITDA of ₹69.98 cr grew 172% YoY, with the margin more than doubling; Q3 standalone EBITDA margin reached 4.9%, up from 4.26% for the 9-month period.
• Per-kg economics transformed: EBITDA per kg rose from ₹19 to ₹37, mainly from moving toward value-added products and rejecting lower-margin commodity sales; inventory gains are described as negligible.
• 5% target in sight: Management is trying to push EBITDA margin to cross 5% over coming quarters, with a longer-term target of stabilizing around 5% of turnover.
• PAT margin ambition: PAT margin expected to rise from 2% to 3%, and "maybe slightly beyond 3," as turnover increases and other expenses including interest come down.
• Margin maintenance mechanism: As copper prices rise, EBITDA per ton on copper does not rise proportionately, so the company undertakes other measures like plastic recycling to maintain the 5% target.
• Heat recovery investment: State-of-the-art heat recovery systems installed on furnaces have reduced cycle time and fuel required per batch; a big decrease in fuel cost is expected going forward.
• Credit rating upgrade: Upgraded from BBB to BBB+, with a target of reaching A- after announcement of yearly results, which would reduce borrowing costs by 0.5% to 1%.

Value-Added Products & Competitive Position

• AI data center products: Added tin and silver-plated copper bus bars that go into AI data centers; currently an export market, sending to the US and other countries.
• Solar wires scaled: Expanded solar interconnect wires production from prototype stage to multiple lines; thin fine solar wires coated with solder for solar panels.
• 20-year moat in bus bars: Management cites two decades of in-house expertise, machines, and systems as a barrier to competition, requiring significant time, effort, and R&D for anyone to match.
• Plastic recycling as byproduct: Around 800 tons of plastic comes from scrap processing; currently 150 tons undergo value addition into LDP granules for cables and injection molding for fan bases; targeting 500 tons by next year with plans to add PVC granules and pyrolysis for alternative fuel.
• Plastic margin impact negligible: Management explicitly stated that the PAT margin impact from plastic recycling is expected to be negligible.
• Customer base: Approximately 500 customers, mostly OEMs across electrical, switch gears, and automobiles.

Advait Surana: "We've been making this product for over 20 years, and we have a lot of machines, a lot of expertise, and all systems are set in-house. So for anyone to compete with it, it takes a lot of time, a lot of effort, and a lot of R&D."

Real Estate & Land Assets

• Three land parcels: Located in industrial areas; Telangana government's Hyderabad Industrial Transformation Policy now allows conversion of industrial lands to commercial or residential use; one parcel in Upal has grown into a semi-urban/urban area.
• Joint development progress: Likelihood of obtaining about 4 lakh square feet without further investment through a joint development with a well-established player; management is hopeful this would happen before March, though no agreement is yet finalized.
• Land valuation declined: When asked for a specific valuation, management declined, only providing the circle-rate range of ₹200-300 cr; examples of price trends were given (₹5,000-6,000 moving to ₹10,000 per sq ft) but no specific valuation or range was committed.
• Parcel strategy: One parcel is prime for residential and is being worked on first; the other two are still being evaluated, with one potentially convertible to residential/offices and one better suited for warehouses. [14-15]

Narendra Surana: "The likelihood of us getting about 4 lakh square feet without any further investment is possible on that particular location through a joint development with a very well-established player. I cannot name those companies because we have not yet finalized the agreement, and we are hopeful that this would happen before March."

Working Capital, Pricing & Peer Comparison

• Pricing mechanism: Both purchases and sales are LME-based; the company buys at LME and sells at LME-plus-fabrication, so daily fluctuations largely match out, with hedging policies managing volatility.
• Working capital dynamics: As copper prices rise, working capital days cycle does not change, but the absolute value of working capital, short-term debt, and turnover all rise; overall profitability benefits.
• Debt strategy: Management is not looking at reducing debt in a big way; the focus is on targeting higher turnover with the same amount of working capital.
• Realization vs raw material divergence: An analyst calculated apparent realization of ~₹8.5 lakh/ton versus cathode price of ~₹12 lakh/ton; management explained the gap partly through scrap being cheaper than cathode, volatile copper prices, and a small element of job-work tonnage that does not contribute top-line revenue, but acknowledged the dynamic is "very interesting" and said clarity would improve in the next presentation.
• Valuation gap with peers: Management attributes the gap with Jain Recycling to a longer working capital cycle driven by value-added products and credit extended to OEMs, which lowers return on capital employed; the lack of institutional shareholding was also acknowledged as a factor, with no specific plan to address it beyond "hopefully we should soon get there."

Management: "I think Jain and others are able to garner much higher premiums because the return on capital employed is much higher. We have a much higher working capital cycle, that's the reason our, because when we do value-added products, we need to give credit. When we give credit, our cycle becomes slightly longer, and our capital employed is also going up."

Guidance & Commitments

Key Metrics