From auto parts to commodity trade—India's newest billionaire hedges his bets
It is indeed rare for an auto component manufacturer to be involved in commodity trading business. However, for Belrise Industries, the business has more than tripled since 2022 to more than a fifth of its overall revenue.
A rare debut surge—67% since its listing in May—catapulted Belrise Industries Ltd’s promoter Shrikant Badve into the dollar billionaires' club on Tuesday.
Yet, the very side bet that has powered the Pune-headquartered auto component maker’s growth—an aggressive push into commodity trading—is also what makes analysts uneasy, given the global market volatility, geopolitical risks and the uncertainties tied to lithium-ion batteries, the lifeline of the electric vehicle (EV) industry. Belrise is also into trading of steel, coils and some electronic products.
It is indeed rare for an auto component manufacturer to be involved in commodity trading business. However, for Belrise Industries, the business has more than tripled since 2022 to more than a fifth of its overall revenue.
A commodity trading business involves purchasing goods from a supplier and then selling it to different buyers at an elevated price, earning margins from the arbitrage.
Along with its core business of component manufacturing, which Belrise carries out through 17 facilities in 10 cities across the country, it expanded into commodity trading business, which it carries out through a Dubai-based subsidiary Badve Engineering Trading FZE. The business focusses on two regions, West Asia and Asia-Pacific.
This business earned a revenue of ₹1,697 crore in fiscal year 2025 (FY25), growing at 17% as against the 9% growth recorded in the manufacturing business. The commodity trading business had a 21% share in the firm’s overall revenue, growing from just about 9% of revenue, or ₹501crore, in FY22.
As per company's disclosures, it gets an operating profit margin of about 6% from commodity trading, much lower than its overall profit margin of 12%.
Analysts have red-flagged the commodity trading business, with one brokerage even saying that demerging the unit can boost the company’s valuation on the stock markets.
LKP Securities, a brokerage firm, said in a 23 September note that 6% margins are substantially lower than the typical 14% that comes from the manufacturing business, which is hurting the profitability of the company.
The company's net profit in FY25 was up 13% at ₹355 crore.
“We are cautious on Belrise’s trading arm: it dilutes margins and extends beyond core operations. A gradual scale-down would, in our view, lift group margins and meaningfully support valuation," Ashwin Patil and Rahul Deshmukh of LKP Securities wrote.
A request for comment from Belrise remained unanswered till press time.
Despite concerns over the side business acting as a drag on its profitability, analysts at PhillipCapital India wrote in a 17 July note that the management expects it to grow in the coming years, although in high single digit, rather than the double-digit growth witnessed in the last few years.
The trading business carried out by the company is low in profitability, and a low growth in this business will impact the company’s overall profitability, wrote Dhiral Shah of PhillipCapital.
Analysts' worries over the company's trading arm have not yet spilled over to shareholders. On Tuesday, Badve’s shareholding of nearly 60% in the component firm crossed the valuation of $1 billion, adding him to the list of promoters whose stake in their companies have crossed the $1 billion mark.
Founded in 1988, Belrise counts itself as a tier-1 supplier of components such as chassis systems, polymer components, battery containers and suspension system, among others to top firms including Bajaj Auto, Tata Motors, Jaguar Land Rover, Hero MotoCorp and Royal Enfield, among others.
“We trade in commodities like high-tensile steel, different grades of coils, some lithium-ion batteries and so on and so forth. And the trading margins that we have are of course, lower than manufacturing business, close to a 6% Ebitda (earnings before interest, taxes, depreciation, and amortization) margin," Swastid Badve, chief of staff (managing director office), said at the company's June quarter earnings call on 12 August. Swastid is the son of founder and managing director Shrikant Badve.
Some analysts also maintain that the company’s exposure to the international commodity markets is good for diversification.
Analysts at Sunidhi Research wrote in a note on 26 August that the business model of commodity trading involves procuring goods in bulk and then selling in smaller lots that allows a company to avoid significant inventory holdings and minimize exposure to price volatility.
“All trading revenues are derived from third-party transactions, with no intercompany sales, ensuring clear segregation from other group businesses. This set-up enables the company to efficiently explore international commodity markets while maintaining operational synergies and risk control," Saurabh Jain of Sunidhi Research said.
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