Scripscan:Bhushan Steel Ltd
cmp:300
Traded in:Nse-bse
Story:The company derives majority of its revenue from cold rolled and galvanised steel products. The bulk of its revenue comes from automobile and white goods sectors, which predominantly use flat products.The company has three plants strategically located in different parts of the country. The Dhenkanal plant in Orissa is close to the raw material supplier and produces sponge iron and billets, the primary steel products. The Khopoli plant in Maharashtra and Sahibabad plant in Uttar Pradesh are close to the two auto hubs, Pune and Gurgaon. These two plants primarily manufacture cold rolled and galvanised products used by auto.The Indian economy has raised the spending power of corporates and households. While the former are using their higher earnings to set up fresh capacities, the latter are utilising higher disposable incomes to acquire new cars or buy a house.Either way, this trend has boosted the consumption of steel in the country, particularly in sectors like infrastructure , white goods and automobiles. This means more business for Bhushan Steel, which manufactures flat steel products.From being a mere convertor, the company is planning to move up the value chain to a fully integrated primary steel producer by indulging itself into a major backward integration cum expansion project in Orissa in three Phases.Currently, the Indian automakers import nearly 30% of high-grade automotive steel, which creates a big opportunity for value-added players like Bhushan Steel. BSL drives nearly 35% of its sales from auto sector and is one of the preferred suppliers in the segment BSL is expected to drive premium over its peers with improved operating efficiency and strong domestic contribution coupled with its positioning in niche segment.With steel demand expected to keep growing at a fast clip, investors are advised to accumulate Bhushan Steel’s stock with a 2-3-year horizon.
