BSRM Steels valuation report: fair value BDT 52–144 (Oct 2026)

Investment case: BSRM Steels averaged Tk 8,568/t of EBITDA in FY22-26; the price implies Tk 8,030/t

BSRM Steels (DSE: BSRMSTEEL) melts imported scrap into billet and rolls it into the Xtreme 500W deformed bar that most large Bangladeshi buildings, bridges and metro lines use. It is the larger listed half of the BSRM group: its parent-side sister Bangladesh Steel Re-Rolling Mills (BSRMLTD) and other group companies hold 55.21% of its shares and the Akberali family 16.85% [1 p.34]. FY2026 (July 2025 to June 2026) was a record: revenue Tk 129.5bn (+24.9%), net profit Tk 7.15bn and EPS Tk 19.03, up 38% [1 p.8]. The board has proposed a Tk 6.00 cash dividend [8].

Our case rests on five drivers. (1) Unit margin is stable. EBITDA per tonne sold has stayed between Tk 7,650 and Tk 9,063 for five years through COVID, the 2022-23 taka devaluation and the 2024-25 construction slump (Exhibit 2). (2) Volume is capped by capacity. The 600 kt Mirsarai mill (commercial since 1-Jan-2025) lifted rolling capacity to 1.4 mt and FY26 output to 1,599 kt, 114% of nameplate [1 p.59]; there is no further capacity in the filings, so growth from here is price and mix, not tonnes. (3) The market is weak but BSRM is gaining. Industry demand fell to about 40 lakh tonnes from about 70 lakh, and seven of 39 mills have shut, as reported by The Daily Star [14]; BSRM Steels' own tonnes rose an estimated 30%. (4) Costs are moving against it in FY27. Under the BERC order announced 3-Jun-2026 and effective 1-Jun-2026, 33 kV industrial power rose from Tk 10.75 to Tk 12.75 per unit (reported by The Financial Express [18]; Prothom Alo gave a 16.68% average rise and 15-19.94% across slabs [19]), and power is 83% of BSRM's energy bill [1 p.52]. (5) The balance sheet is deleveraging. Net debt fell from Tk 43.0bn to Tk 38.9bn in FY26 and we expect Tk 32.6bn by FY29F.

At Tk 90.6 the stock trades on 4.8x FY26 EPS and 5.7x our FY27F EPS of Tk 15.92, 4.9x FY26 EV/EBITDA and 0.85x book. The reverse check says the market capitalises a mid-cycle EBITDA of Tk 8,030/t at our 5.5x multiple, against a five-year average of Tk 8,568/t. Our base fair value is Tk 110, inside a Tk 52-144 range; the probability-weighted value is Tk 104.0.

BSRM Steels melts 1,076 kt of billet, rolls 1,599 kt of rod and buys the gap from BSRM Ltd

How it makes money. BSRM Steels buys heavy-melting scrap (mostly imported through Chattogram, some from local ship-breaking), melts it with sponge iron in induction furnaces at its Khilmurari and Nasirabad backward units, and casts billet. Billet is then hot-rolled into MS (mild steel) deformed bar in two rolling mills: the original 800 kt mill at Fouzderhat, Sitakunda (since 2008) and the 600 kt Mirsarai mill (500 kt rebar + 100 kt wire rod) that started on 1-Jan-2025 [s1 p.11, p.59]. Its own melting capacity (1.0 mt, run at 108% in FY26) is smaller than its rolling capacity, so it buys the rest of its billet, mainly from BSRM Ltd: billet purchases were Tk 39.4bn in FY26 and the related-party note shows Tk 36.8bn of transactions with BSRM Ltd [s1 p.51, p.56].

What it sells. Revenue is almost all Xtreme 500W DWR rebar (Tk 114.5bn, 88% of FY26 revenue), with smaller lines in Xtreme CWR, Ultima 420D, Maxima 500, wire rod and 'others' (scrap, billet) [1 p.50]. Sales go through dealers and directly to projects on 30-60 day terms or cash in advance; dealer advances (contract liabilities) were Tk 1.38bn at June 2026. Export sales (incl. deemed exports to tender projects) were 43,909 t worth US$38.3m in FY26 (3.6% of revenue); China is the largest foreign destination (Tk 1.03bn) [1 p.50]. The brands are licensed from H. Akberali & Co., a sponsor company, for a royalty that rose from Tk 150/t to Tk 230/t in FY26 (Tk 343m) [1 p.53].

Pricing power. BSRM is the price leader: in March 2026 its 75-grade rod sold at about Tk 95,000/t at the mill gate against Tk 91,000-92,500 for KSRM, AKS and GPH, as reported by The Business Standard [11]. That premium, plus the 500W grade that big projects specify, is why its EBITDA per tonne held up while weaker re-rollers shut.

Management and capital allocation. The chairman (Alihussain Akberali) and managing director (Aameir Alihussain) are from the sponsor family; four directors drew Tk 111m of remuneration in FY26 [1 p.54]. Capital has gone into capacity (Tk 16.4bn of PPE additions in FY25 for Mirsarai [1 p.24]), then into deleveraging and a rising cash dividend (Tk 3.20, Tk 5.00, Tk 6.00 for FY24-26). The FY26 investment of Tk 2.0bn in BSRM Wires, an unlisted sister company that was also borrowing from BSRM Steels, is the one allocation that moved money inside the group rather than to shareholders.

Ownership and the group. BSRM Steels is controlled by the Akberali/Alihussain family through BSRM Ltd and other group companies (72.1% together); foreign investors hold 0.60% and general investors 27.34% [1 p.34]. Group links run both ways: BSRM Steels buys billet from BSRM Ltd, owns 28.8m BSRM Ltd shares (Tk 3.04bn at the June price) [1 p.28], lends to sister companies (Tk 2.72bn) and guarantees Tk 4.5bn of their bank loans [s1 p.30, p.58]. In FY26 it also paid Tk 2.0bn for 26.34% of BSRM Wires, which became an associate and booked a first loss share of Tk 5.76m [1 p.28]; with Tk 1.69bn of loans to BSRM Wires [1 p.30], total exposure to that one sister company is about Tk 3.7bn.

Subsidiaries and associates (SOTP test). BSRM Steels has no subsidiaries. Its two holdings are small against our base equity value of Tk 41.4bn: the BSRM Ltd shares at market (Tk 2.7bn) and BSRM Wires at book (Tk 2.0bn), each under 10% of value, so sum of the parts is not used: we value the steel business on consolidated figures and add the listed shares at market and BSRM Wires at book in the EV-to-equity bridge. BSRM Wires' own statements are not in our corpus (rated A- by its sister's disclosure [1 p.58]); we hold its profit share at zero, a labelled gap. Together with Tk 151m of bonds, the investments added in the bridge total Tk 4.9bn.

Bangladesh steel: 9-12 mt of capacity chases 4-5 mt of demand, and mills outside BSRM run at 40-60%

Market size. Sources disagree, so we show a dated range. BigMint put capacity at 90 lakh tonnes and annual need at 85 lakh tonnes in 2024, with BSRM (group) at 25% of demand, Abul Khair Steel (AKS) 14%, GPH Ispat 8% and KSRM 6% [15]. By September 2026 The Daily Star counted about 1.22 crore tonnes of capacity against about 50 lakh tonnes of demand [13], and in October BSMA's Sumon Chowdhury put consumption at about 40 lakh tonnes, down from 70 lakh, with the government's share of use down from about 60% to 20% [14]. Monthly MS rod demand swung between about 6.5 lakh tonnes (mid-2024) and 4 lakh tonnes in lean months [12].

BSRM's share. The best dated figure is BigMint's 25% of national demand for the whole BSRM group (BSRM Ltd + BSRM Steels) in 2024 [15]. We cannot measure the share since then reliably: our FY26 tonnage for BSRM Steels (1,560 kt, estimated) divided by single-outlet demand figures of 4-5 mt gives an indicative 31%-39% for BSRM Steels alone (Valuation sheet), which, with BSRM Ltd's own rebar on top, looks too high and suggests the reported demand figures are understated. We read it only as evidence that BSRM gained share while weaker mills shut (seven of 39, as reported by The Daily Star [14]).

Competition. The three big rivals are in different shape. AKS and KSRM are unlisted, so we have no filings for them. GPH Ispat, the listed EAF producer, saw FY26 net revenue fall 30% to Tk 39.4bn with finance cost of Tk 5.51bn eating 94% of its operating profit [9 p.10]; The Daily Star reports it has asked Bangladesh Bank for a waiver to restructure debt with more than two dozen lenders [14]. A weak GPH is a share opportunity for BSRM but also a risk of distressed price-cutting.

Demand drivers. Steel follows construction: government projects (ADP), private housing and commercial building. ADP spending slowed through the 2024 transition and the election period, and private building cooled with high lending rates (system weighted-average lending rate 12.13% in FY26 [7]). After the national election, construction began to pick up [11], and ECNEC approved 12 projects worth Tk 1,68,780 crore including MRT Line-5 (South), as reported by Prothom Alo (16-Sep-2026) and The Daily Star [s20, s14]; together with revised MRT Line-1 budgets [14]. Approval is not spending, so we treat it as a possible demand driver, not a fact in the forecast. We do not have IMED ADP-implementation data in our tools (gap), so the demand recovery is a labelled judgement in the volume driver.

Raw material and policy. Bangladesh imports most of its melting scrap; landed HMS scrap rose from about US$360/t to US$410/t at Chattogram in March 2026 on Middle East freight and fuel costs, and ship-breaking scrap rose to about Tk 58,000/t [11]. Scrap had been US$336/t CFR in September-October 2025 [12]. On the cost side, power is the second-largest cost: the June 2026 tariff order [s18, s19] added about Tk 1,785/t to sector production costs according to a producer quoted by The Daily Star [13]. Gas rationing also hurts reheating furnaces (one mill's burners were shut for 13 days) [13].

Policy that moves the lines. Three policy levers matter. (1) Import duties, advance income tax and per-tonne VAT on scrap, billet and finished rod are reset each June in the Finance Act; BSRM nets VAT out of revenue (Tk 3.63bn in FY26 [1 p.50]) and a duty-drawback dispute of Tk 425m on deemed exports to tender projects is pending at the Appellate Division [1 p.49]. (2) Bangladesh Bank's LC-margin and import rules decide how easily scrap can be financed; BSRM's Tk 19.9bn of accepted import bills shows it still has access while weaker mills do not. (3) BERC power and gas tariffs feed straight into energy cost per tonne. Local ship-breaking scrap is a smaller, Taka-priced supply (about Tk 58,000/t in March 2026 [11]); mills that rely on imports pay dollar prices. We model (1) and (2) only through materials cost and the interest rate; a duty change in the June 2027 budget would be an event note.

Share trend. BSRM Steels' tonnes rose from 870 kt in FY24 to 1,560 kt in FY26 while industry consumption fell, so it very likely gained share in a shrinking market (size of the gain uncertain, see above). Part of that is mechanical (the Mirsarai mill), part is the flight to quality when buyers worry about weaker mills' product and delivery, and part is that BSRM could still finance scrap. We assume it keeps most of the gain: base FY27F tonnes fall 5%, about the same as the market, and rise with the market afterwards.

Per-tonne economics: spread over materials was Tk 21,213/t in FY26; energy took Tk 7,322/t

We rebuild the cost of sales from the notes. In FY26 BSRM consumed Tk 56.5bn of scrap and Tk 39.4bn of bought billet [1 p.51]; factory overheads were Tk 19.0bn, of which power Tk 9.52bn, gas Tk 1.40bn and depreciation Tk 2.10bn [1 p.52]. Per tonne sold, net realisation was about Tk 83,000 and materials (scrap, billet, consumables and stock change) Tk 61,786, leaving a spread of Tk 21,213/t. Energy cost Tk 7,322/t and other conversion (stores, wages, repairs) Tk 3,508/t. Materials are 84% of cost of sales and energy 10%.

Realisation fell in FY25-26 (from Tk 95,094/t in FY24 to Tk 83,000/t) because scrap fell, yet the spread barely moved: BSRM passes scrap through. What changed is scale: energy per tonne fell from Tk 8,168 in FY25 to Tk 7,322 as the new mill filled, and other conversion from Tk 3,756 to Tk 3,508. The sensitivity that matters: each Tk 1,000/t of EBITDA is worth Tk 2.94 of FY27F EPS, 18% (Valuation sheet).

How sure are the FY26 tonnes? The statements print production (1,598.5 kt) but not sales tonnes. Our base estimate, 1,560 kt, is production less the finished-rod stock build. A cross-check from the royalty note (Tk 343.06m at Tk 230/t = 1,492 kt of royalty-bearing tonnes [1 p.53], scaled by FY25's 93% ratio of royalty tonnes to sales) gives 1,601 kt. We keep the lower figure because the higher one exceeds production while stock rose; on the royalty tonnes FY26 EBITDA/t would be Tk 8,739 rather than Tk 8,970. Treat FY26 per-tonne figures as +/-3%; the mid-cycle valuation is barely affected because EBITDA/t x tonnes gives the same EBITDA.

How pass-through works. BSRM sets a list price for each grade and changes it every few weeks; dealers and project buyers see the new price quickly. When scrap rises, BSRM raises prices but rarely by the full amount at once, because rivals with idle capacity discount to win orders. The inventory it holds (99 days of cost of sales, Tk 12.6bn of raw materials and Tk 14.2bn of finished rod at June 2026 [1 p.29]) cushions the first months: rising prices flatter margins while cheaper stock is used, as in Q4 FY26, and falling prices squeeze them. We therefore model a cost shock as 60% passed through in the same year and the rest a year later.

Peers' cost position. GPH's FY26 gross margin was 17.9% on net revenue (Tk 7.05bn on Tk 39.4bn) [9 p.10], higher than BSRM's 10.9%, but its finance cost of Tk 5.51bn took almost all of it; BSRM's finance cost was 25% of operating profit. BSRM Ltd, which sells billet to BSRM Steels and its own rebar, earned a 9M FY26 consolidated EPS of Tk 15.54 including its share of BSRM Steels [10 p.3]. A full cost curve needs AKS and KSRM data that is not public (gap).

History: revenue rose from Tk 67.1bn to Tk 129.5bn in FY22-26 while EBITDA margin stayed at 8.7%-10.8%

Revenue rose from Tk 67.1bn in FY22 to Tk 129.5bn in FY26, almost all from volume after FY24. Net profit went from Tk 3.3bn to Tk 7.2bn; the dip in FY23 (Tk 3.0bn) was finance cost: Tk 2.59bn of net finance cost in the devaluation and LC-crisis year [2 p.88]. FY26's 38% profit jump came from volume (+30%), lower unit conversion cost and cheaper USD loans, partly offset by lower interest received from sister companies (Tk 449m vs Tk 761m) [1 p.55].

Quarters. FY26 was back-loaded: gross margin was 9.4% in Q1 and 8.0% in Q2, then 11.2% in Q3 and 15.3% in Q4, when rod prices jumped after the Middle East shock while the company used cheaper scrap in stock [s3 p.3, s1 p.8]. Annualising the January-June 2026 half gives EPS of Tk 27.78, an upper bound, not a run-rate: the July-September quarter is the weakest every year (monsoon, post-budget), and Q1 FY27 results (due mid-November) are not yet filed.

Balance sheet: net debt is 2.8x EBITDA and Tk 19.9bn of loans are import bills for scrap

At 30 June 2026 BSRM had Tk 23.4bn of long-term loans (incl. a Tk 13.6bn USD syndicated loan for Mirsarai) and Tk 22.8bn of short-term loans, of which Tk 19.9bn were accepted bills/UPAS for imported scrap [s1 p.35, p.46]. Net of Tk 7.4bn of cash and FDRs, net debt was Tk 38.9bn, 2.8x FY26 EBITDA, down from 4.0x. Interest and bank charges of Tk 2.96bn were 6.5% of opening borrowings, cheap because much of the debt is in US dollars; operating profit covered them 4.0x [1 p.55].

FX is the hidden leverage. The company's own sensitivity note says a 2% taka move changes profit by Tk 465m [1 p.62], i.e. about Tk 23bn of net US$ exposure. Cheap dollar debt saved interest but leaves BSRM exposed to the next devaluation, like FY23 when net finance cost jumped to Tk 2.59bn [2 p.88]. The taka has been steady: export receipts imply Tk 123.2/US$ in FY26 and Tk 123.4 in FY25 [1 p.50].

Maturities. Long-term loans are spread: the Eastern Bank syndicate for the second melting unit is down to Tk 1.36bn, the USD syndicate (Standard Chartered, BRAC Bank) for the Mirsarai mill is Tk 13.6bn, and BDT term loans total Tk 8.5bn, including two 'FC loss mitigation' term loans taken under BRPD circular letter 50 (2024) to convert past exchange losses into five-year loans [s1 p.35, p.42]. Short-term import bills roll every few months and are secured on stocks; personal guarantees of the directors back several facilities [1 p.42]. With interest cover near 4x, refinancing risk is low; the exposure is to the taka, not to lenders.

Revaluation. Land and PPE carry a Tk 7.83bn revaluation reserve, 20% of equity [1 p.7]. On book ex-revaluation the stock trades at 1.06x and FY26 ROE was 25% (vs 19% reported).

Earnings quality: operating cash of Tk 9.2bn covered Tk 7.2bn of FY26 profit; Tk 2.7bn of loans sit with sister companies

Operating cash flow (before interest, IFRS 18) was Tk 16.9bn in FY25 and Tk 9.2bn in FY26 against net profit of Tk 5.2bn and 7.2bn [1 p.10]. FY26 cash was lower because inventory rose Tk 6.5bn as the company stocked scrap ahead of higher prices [1 p.57]. After interest paid and capex, free cash flow to equity was Tk 5.8bn in FY26, against Tk 1.88bn of dividends paid.

Governance points. (1) Loans to sister companies of Tk 2.72bn (BSRM Wires Tk 1.69bn, Chittagong Power Tk 0.94bn, BSRM Ispat Tk 0.09bn) earn interest (Tk 449m in FY26) but are related-party credit [s1 p.30, p.55]. (2) Corporate guarantees of Tk 4.5bn for sister companies' bank facilities, given without fee; the company says it has started withdrawing them [1 p.58]. (3) Trademark royalty to a sponsor company rose 53% per tonne [1 p.53]. (4) A Tk 425m duty-drawback liability is under appeal at the Appellate Division [1 p.49]. (5) The audit is clean, with key audit matters on IFRS 18, revenue and related parties [s1 pp.2-4]. A 50% write-down of the sister-company loans would cost Tk 3.62 per share (Valuation sheet).

Forecast: EBITDA/t of Tk 8,819 and volume -5% take EPS to Tk 15.92 in FY27F before Tk 18.52 in FY28F

We forecast each line from its own driver: tonnes x realisation for revenue; materials, energy and other conversion per tonne for cost of sales; royalty per tonne plus a revenue share for selling cost; interest on opening borrowings; and the statutory WPPF and tax rates. Short-term loans balance the sheet. The drivers and the reason for each are on the Assumptions sheet.

Volume (-5% in FY27F, then +4% and +3%). BSRM Steels rolled 114% of nameplate in FY26, so it cannot grow much without new capacity, which is not in the filings. For FY27 we cut volume 5%: industry demand is about 40 lakh tonnes, BSRM's deputy managing director said in October that the company runs at about 80% of capacity [14], and July-September is the weakest quarter. FY28-29 recovery is our judgement, not a known order book: it assumes the MRT and road projects that ECNEC approved (reported by Prothom Alo and The Daily Star [s20, s14]) move to procurement and private building continues to recover after the election [11]. The bear case (-15%) assumes demand stays at 40 lakh tonnes and BSRM loses some of its FY26 gains to AKS, KSRM and a discounting GPH.

Price (+8% in FY27F). TCB lists 60-grade rod at Tk 92,500-94,500/t in October 2026, about 10% above a year earlier [14]; our FY26 realisation was Tk 83,000/t, dragged by weak H1 prices. We take 8% to allow for discounts of about Tk 1,500/t reported in September [13]; then 2.5% and 3% as cost pass-through by the price leader.

Scrap and the taka (+7% and +2% in FY27F). Scrap averaged roughly US$370/t over FY26 (US$336 in autumn 2025, US$410 landed in March 2026, +US$20 into October) [s12, s11, s14], so FY27 costs about 7% more in dollars. We assume 85% of materials are dollar-linked and the taka weakens 2% a year; materials rise to Tk 67,235/t. The FX crawl also costs Tk 465m a year on Tk 23bn of US$ exposure.

Power and gas (+12% per tonne in FY27F). Under the BERC order announced 3-Jun-2026 and effective 1-Jun-2026, 33 kV industrial power rose from Tk 10.75 to Tk 12.75 per unit, about 19% (reported by The Financial Express [18]; Prothom Alo gave a 16.68% average rise and 15-19.94% across slabs [19]; The Daily Star gave 17.86% [13]); power is 83% of energy cost; we assume solar and efficiency offset part of it. Energy per tonne goes from Tk 7,322 to Tk 8,201.

Below EBITDA. Interest and charges of 6.8% on opening borrowings (6.5% in FY26) give Tk 3.1bn in FY27F; interest from sister companies falls to Tk 327m as those loans shrank; WPPF 5%; tax 21.5% (21.3% in FY26) [1 p.48]. Capex is Tk 1.5-1.7bn a year (maintenance and solar), below D&A of about Tk 2.2bn; inventory stays at 99 days.

Balance sheet and cash. The same drivers set working capital: inventory at 99 days of cost of sales, receivables at 20 days of revenue and payables at 8 days (12 in FY26, when Tk 2.98bn was owed to BSRM Ltd for billet [1 p.46]). Long-term loans amortise by about Tk 2.8bn a year (Tk 2.78bn current portion at June 2026 [1 p.35]); short-term loans are the balancing item and cash is held at Tk 4.0bn. Operating cash of Tk 8.0-9.7bn a year pays interest, capex and a 32% payout and still cuts net debt to Tk 32.6bn by FY29F. Equity grows to Tk 53.4bn and NAV per share to Tk 141.99.

What we do not model. No new capacity (none announced), no revaluation of land, no fair-value change on the BSRM Ltd shares, zero profit from BSRM Wires (its statements are not available to us) and no change in the related-party loans. Each would raise or lower the line named, not to the core forecast.

Valuation: Tk 52-144; base Tk 110 = 5.5x mid-cycle EV/EBITDA, 6.9x FY27F P/E

Steel is cyclical and capital-heavy, so the primary method is EV/EBITDA on mid-cycle earnings (50%): Tk 8,500/t, just under the FY22-26 mean of Tk 8,568/t, times FY28F tonnes of 1,541 kt gives Tk 13.1bn of EBITDA. At 5.5x (regional long-steel peers trade at 4-7x; we discount for liquidity) EV is Tk 72.1bn. Less Jun-26 net debt of Tk 38.9bn, plus the BSRM Ltd shares at market and BSRM Wires at book (Tk 4.9bn), equity is Tk 38.0bn or Tk 101.2 a share.

The DCF (30%) discounts free cash flow to the firm at a 13.4% WACC: cost of equity 18.0% = 10-year T-bond 9.27% (25-Oct-2026 auction [7]) + beta 1.18 x 7.0% ERP + 0.5% liquidity premium, and a 10% pre-tax marginal cost of debt at a 45% debt weight. FY27-29F come from the model; FY30F fades halfway and FY31F reaches a mid-cycle EBITDA margin of 9.7%; terminal growth is 6%. Cash flows are discounted to 30-Jun-2026, the balance-sheet date of the net debt we deduct (four months before the price date); terminal value is 72% of EV, so we weight the DCF below the EV/EBITDA leg. Value: Tk 129.1. The P/E leg (20%) applies 6.5x, below the company's FY21-25 year-end median, to FY27F EPS of Tk 15.92: Tk 103.5.

Why these inputs. The 5.5x multiple sits inside the 4-7x range used for regional long-steel producers in our sector notes, with a discount for DSE liquidity (60-day turnover Tk 24.2m a day) and the family-group control; the market itself prices the stock at 4.9x FY26 EBITDA. The beta of 1.18 comes from 104 weekly returns against DSEX (raw 1.27, correlation 0.68), Blume-adjusted; it is above 1 because the stock moved more than the index through the 2025-26 swings. The 10% marginal cost of debt is above the 6.5% BSRM paid in FY26 because new BDT borrowing costs about 12% (system lending rate 12.13% [7]) and USD funding may not stay as cheap. We do not use P/B as a weighted method because the revaluation reserve and the BSRM Ltd shares distort book; it is shown as an implied multiple.

What the base implies. Tk 110 is 6.9x FY27F and 5.9x FY28F EPS, 1.03x June 2026 book (1.29x ex-revaluation), 5.8x FY27F EV/EBITDA and Tk 53,840 of EV per tonne of rolling capacity. For scale, the Mirsarai mill alone added about Tk 16bn of PPE for 600 kt in FY25 [1 p.24], so the market prices the whole integrated business at little more than replacement cost of rolling plus melting.

Risks: a 15% scrap jump or 10% taka fall each cost Tk 14-15 of fair value

Each risk below is one driver changed in the model with everything else at base; the effects are from recalculating the workbook (Sensitivity sheet). The ranking follows the business model: BSRM earns a thin spread on a large tonnage, so anything that moves the spread (price, scrap, the taka, power) matters more than interest rates, and volume matters mostly through the mid-cycle EBITDA that drives half of the value. The bear case combines several of these at once (volume -15%, a weaker taka, higher energy and a lower mid-cycle EBITDA of Tk 7,650/t, FY22's level), which is why it sits well below any single-risk value.

• Scrap price (materials per tonne). A 15% rise in HMS scrap with 60% passed through in the year costs Tk 10.22 of FY27F EPS and Tk 13.7 of fair value. Trigger: Middle East freight, Turkish/US scrap export prices. Watch: landed scrap at Chattogram, quarterly gross margin.
• Taka devaluation (materials and FX on US$ debt). A 10% weaker taka costs Tk 11.42 of FY27F EPS and Tk 15.1 of value: about Tk 23bn of US$ exposure [1 p.62] plus dollar-priced scrap. Watch: BB exchange-rate policy, reserves.
• Demand and share (volume). Volume 10% below base costs Tk 2.77 of EPS and Tk 18.8 of value through the mid-cycle EBITDA. Trigger: ADP cuts, private housing stall. Watch: BSMA demand, IMED ADP release, BSRM's quarterly revenue.
• Price war (realisation). A 5% lower realisation for a year (rivals discounting to fill idle mills; GPH under restructuring [14]) costs Tk 13.06 of FY27F EPS and Tk 20.4 of value.
• Energy (energy per tonne). Another 15% on energy cost (a second tariff rise or gas cuts) costs Tk 3.62 of EPS and Tk 8.6 of value. Watch: BERC orders.
• Interest rates (finance cost). +200bp on all borrowings costs Tk 1.84 of EPS and Tk 2.4 of value (the DCF uses a separate cost of capital).
• Related parties (equity bridge). A 50% write-down of Tk 2.72bn lent to sister companies would cost Tk 3.62 a share; the Tk 4.5bn of guarantees is a contingent claim not in our numbers [1 p.58].
• Opportunity (volume). If the ECNEC-approved MRT projects [s20, s14] reach procurement early, +5% volume adds Tk 1.38 of EPS and Tk 9.4 of value.

What to watch: Q1 FY27 gross margin above 9% would confirm the base case

• Q1 FY27 results (mid-November). Our FY27F quarter split implies revenue of about Tk 27.1bn and EPS of Tk 2.17; a gross margin near FY26's Q1 (9.4%) at higher power cost would show the spread is holding.
• Scrap and rod prices. TCB 60-grade rod above Tk 92,500/t with landed scrap under US$420/t keeps the spread near Tk 22,000/t.
• Demand. BSMA monthly demand back above 5 lakh tonnes, and MRT Line-5 (South) and other ECNEC projects reaching procurement.
• Taka and rates. Any step move in BDT/US$; BB policy rate and the 10-year yield (9.27%).
• Related parties. Withdrawal of the Tk 4.5bn of corporate guarantees, as the company says it has started [1 p.58]; BSRM Wires' first full year as an associate.

FAQ

What is BSRM Steels' fair value range?

Tk 52-144 per share, base Tk 110, from 5.5x mid-cycle EV/EBITDA (50%), a DCF (30%) and 6.5x FY27F P/E (20%). The probability-weighted value is Tk 104.0. The price on 29-Oct-2026 was Tk 90.6.

Why do you expect FY27 EPS to fall from Tk 19.03?

Volume -5% after a record year, higher power cost after the June 2026 BERC tariff order (reported by The Financial Express and Prothom Alo) and an FX loss on US$ debt take EPS to Tk 15.92; spread per tonne improves slightly. EPS recovers to Tk 18.52 in FY28F.

How is BSRM Steels different from BSRM Ltd?

Both belong to the BSRM group. BSRM Steels has 1.0 mt of melting and 1.4 mt of rolling and buys extra billet, mainly from BSRM Ltd; BSRM Ltd and other group firms own 55.21% of BSRM Steels, and BSRM Steels owns 28.8m BSRM Ltd shares.

What is the biggest risk?

The spread between rod prices and scrap. A 5% price cut for a year costs Tk 13.06 of FY27F EPS; a 15% scrap rise with 60% pass-through costs Tk 10.22; a 10% weaker taka costs Tk 11.42.

Does BSRM Steels have new capacity coming?

Not in the filings. The 600 kt Mirsarai rolling mill started on 1-Jan-2025 and the plants ran at 114% of nameplate in FY26, so future growth is mainly price and mix.

Is sum of the parts used?

No. The BSRM Ltd shares (at market) and the BSRM Wires stake (at book) are each under 10% of value; they are added to the operating value in the EV-to-equity bridge.

Sources

1. BSRM Steels Limited audited financial statements, year to 30-Jun-2026 (A. Qasem & Co., 14-Oct-2026) · link · accessed 2026-10-30
2. BSRM Steels Integrated Annual Report 2024-25 (FY2025; corpus key BSRMSTEEL_ANNUAL_2025) · link · accessed 2026-10-30
3. BSRM Steels un-audited financial statements, 9 months to 31-Mar-2026 (Q3 FY2026) · link · accessed 2026-10-30
4. BSRM Steels un-audited financial statements, half year to 31-Dec-2025 (Q2 FY2026) · link · accessed 2026-10-30
5. BSRM Steels un-audited financial statements, quarter to 30-Sep-2025 (Q1 FY2026) · link · accessed 2026-10-30
6. AnalystBro market data: DSE daily and weekly bars for BSRMSTEEL, DSEX, BSRMLTD, GPHISPAT to 29-Oct-2026 · link · accessed 2026-10-30
7. Bangladesh Bank treasury auction page (10-year bond cut-off 9.2680%, 25-Oct-2026) and Scheduled Banks Statistics Apr-Jun 2026, Table-102 (lending rate 12.13%) · link · accessed 2026-10-30
8. DSE announcement: BSRMSTEEL dividend declaration, 60% cash for FY2026, 15-Oct-2026 · link · accessed 2026-10-30
9. GPH Ispat Limited audited financial statements, year to 30-Jun-2026 · link · accessed 2026-10-30
10. Bangladesh Steel Re-Rolling Mills Limited un-audited statements, 9 months to 31-Mar-2026 · link · accessed 2026-10-30
11. The Business Standard, 'Rod prices jump Tk10,000 per tonne in 10 days, cement up Tk25 per bag', 12 Mar 2026 · link · accessed 2026-10-30
12. The Daily Star, 'Rod price recovers as demand, scrap costs climb', 23 Jan 2026 · link · accessed 2026-10-30
13. The Daily Star, 'Steelmakers squeezed by higher costs, weak demand', 3 Sep 2026 · link · accessed 2026-10-30
14. The Daily Star, 'Steelmakers pin hopes on revival of govt projects', 11 Oct 2026 · link · accessed 2026-10-30
15. The Daily Star, 'Four steelmakers control 53% of the market: study' (BigMint), 19 May 2024 · link · accessed 2026-10-30
16. The Business Standard, 'Two BSRM listed firms post record Tk23,943cr revenue in FY26', 14 Oct 2026 · link · accessed 2026-10-30
17. The Financial Express, 'Electricity prices hiked across the board', 4 Jun 2026 · link · accessed 2026-10-30
18. Prothom Alo English, 'Power tariff rises by 16.68pc from June', 3 Jun 2026 · link · accessed 2026-10-30
19. Prothom Alo English, 'ECNEC approves Gabtali-Dasherkandi metro rail project, 11 others worth Tk 1.69 trillion', 16 Sep 2026 · link · accessed 2026-10-30
20. AnalystBro model for BSRMSTEEL (model.xlsx, the workbook below) · link · accessed 2026-10-30