BSRM Company Overview &

Business Model Analysis

Acquisition of Particular
Resource & Economic of
Scales
BSRM Iron & Steel Co
Ltd. (BISCO)(Proposed
Manufacturer of M.S.
Billet Steel)
BSRM Steel Limited
(MS Rod Manufacturer)

Alliance for
TechnologicalOptimizati
on
Badische Stahl

Engineering (BSE),
Germany
Danieli Group, Italy

Supply Partners

Scrap Supplier
Billets Suppliers
Power Suppliers

Financial Partners

Different Banks (for

Mortgage Assets)

Steel Production
o
o
o

XTREME 500 W
GRADE 60
STRUCTURAL
SECTION
SPRING STEEL

Market Need
Analysis
Supply According to
Needs
Export Products

Scrap Metals
Technological
Equipment
Market
Reputation
Skilled
Human
Resource
R&D

Value Driven:Property Developer & Road &

Bridge Constructor
Exporting Fee
R&D Expenditure
Production Cost
Internal & External Source of Fund

MuntasirMamun

Personal Assistance in
Stores.
Repair and Return
Center
Email Support
Telephones Support
Communities:
Facebook

Newness
Newness
Customization
Customization
Design
Strength
OS updates
Brand status
status
Brand
Price
Price
Risk reduction
Risk
reduction
Accessibility

Quality Control

Technological

Scrap Suppliers

Advancement

Billet Suppliers

Own Distribution

540 Outside Dealers

Credit Term Dealers

Product sales
o
o
o
o

XTREME 500 W
GRADE 60
STRUCTURAL SECTION
SPRING STEEL

Asset sales& Services

25.01.2015

Construction
High end market
Business
and low end
Property
market.
Developer
Road &
Bridge
Construction
Company
Export
Processing
Zone
People Aged
Over 35

Historical Business Performance, Future Projection and Major Future Variables

Historical analysis is based on ratio analysis. It was not possible to compare with industry analysis as
most other major companies are not enlisted in stock exchange.
Liquidity
Asset Management
Debt Management
Profitability
Stock Market
Increasing but bellow
Efficient in inventory
Exposed to change in
Showing a
Decreasing trend in
P/E ratio shows that
the benchmark (1).
Handling.
interest rate as highly
decreasing trend in
share price has fallen
Problematic cash
Inefficient in asset
financed by debt but
profit margins and
in past years and may
conversion cycle.
management and cash
their operating income
ROA & ROE.
continue to fall in
Problem in working
collection.
is enough to cover
coming years.
Capital.
interest expenses.
Future Projection and Variables: Their liquidity condition seems bad as they have made investments in long term asset and
their liabilities have increased. Though their condition is bad now; this company can be profitable in the long run as they have
made the investment. But their major concern for future should be the loosing efficiency in asset management. Efficient asset
management can result in higher revenue and lower cost which will result in higher profitability. In order to save the falling
share price they may ask their institutional investor and directors to buy share from public which will save them from falling
price. So, falling P/E should not be a major concern as most of the shares are held by institutional investors and directors. So
The most important variables for future are to using asset efficiently and making intuitional and directors to buy the shares.

Recommendation: Buy, Hold or Sale

This analysis is done based in three kind of valuation model: (31st December, 2013)
Corporate Valuation Model
P/E Multiple approach
21,314,575,311.37 (total value of the company)
75.77
6,518,754,281.00 (total market value of all common 68.70
stock)
Recommendation: Shareholders should hold it as in 2013 it showed little upward trend after market
crash.
Investment thesis
Financial statement of BSRM does not provide uniform information as their dividend and many other
information of financial statement of 2013 do not math with previous years information. So,
corporate valuation model suits best for its valuation which shows currently BSRM shares are under
priced. In 2o13 it showed little upward trend and BSRM has made huge investment in PPE recently.
This indicates that their share price may rise in future. At the same time, most of BSRM shares are
held by directors and intuitional investor which means this share is less risky. It is kind of share which
is underpriced, less risky and it has potential to rise share price in the long run. Risk adverse investor
may invest in BSRM share.
Investment risks
BSRM has shown historical standard deviation (2013 2015) of 2.5124%. Besides, their publicly
held share amount is only around 13%. Both the data shows that it is a less risky investment.
BSRM is exposed to risk of:
BSRM Steels gross and net margin squeezed to 4.96% and 2.26% respectively in 2012, due
to rise in the costs of raw materials, gas & electricity, bank borrowing and BDT depreciation.
BSRM Steel Ltd. is heavily exposed to leverage. It has two syndicated term loan at 6-month tbill rate+6%. This high interest eats-up a significant portion of its profit.
Their Financial statements do not provide uniform information. For example, dividend and
much other information of 2013 do not match with information of previous years.
Improvement in efficient utilization of asset in the short run is not guaranteed. Whereas weak
asset management is one of their main drawback.
Since it imports a significant part of its required raw material, violent fluctuation of the billet price in
the international market significantly increases the cost of rod production and squeezes the profit.
Nonetheless, the up-coming in-house raw material plant of the company is expected to reduce the per
ton cost of rod production by BDT 4000 BDT 5000.

Intrinsic Price
Market Price

Constant Growth Model

86.33
68.70