This small-cap steel stock, engaged in manufacturing and supplying steel tubes, pipes, and related products, serving sectors like infrastructure, construction, agriculture, and renewable energy, jumped 19 percent after the company entered into the renewable energy sector by investing in a 225 MW PM-KUSUM solar power project.
With a market capitalization of Rs. 2,050.03 crores, the share of Rama Steel Tubes Limited has reached an intraday high of Rs. 13.86 per equity share, rising nearly 18.5 percent from its previous day’s close price of Rs. 11.70. Since then, the stock has retreated and is currently trading at Rs. 13.19 per equity share.
Rama Steel Tubes Limited (RSTL), a well-known steel tube and pipe manufacturer, has made its first move into the renewable energy sector by investing in a 225 MW solar power project under the Indian government’s PM-KUSUM scheme.
The project, managed by Onix IPP, a Special Purpose Vehicle (SPV), is located in Maharashtra and has signed long-term Power Purchase Agreements (PPAs) with the Maharashtra State Electricity Distribution Company Limited at a fixed rate of Rs. 3.04 per unit for 25 years.
Rama Steel Tubes Limited holds a 10 percent equity stake in the SPV, which is expected to generate gross annual revenue of Rs. 108.11 crore. From this, RSTL will earn approximately Rs. 10.81 crore annually, totaling around Rs. 270.28 crore over 25 years. This strategic move not only adds a stable revenue stream but also supports RSTL’s sustainability and ESG goals, marking its entry into the clean energy space.
Rama Steel Tubes Limited is a prominent Indian manufacturer specializing in steel pipes and tubes, including Rigid PVC and Galvanized Iron pipes, as well as square-section products. The company was incorporated in 1974 and has since established itself as a trusted name in the steel tube and pipe market in India and abroad.
The company has over 46 years of experience and a team of more than 300 employees. It works with over 300 dealers and distributors, serving more than 1,550 happy customers. The company has completed over 400 projects and offers more than 200 different products (SKUs), showing its wide reach and expertise.
As of September 30, 2024, the company had a total production capacity of 294,000 MTPA. It operates facilities in Sahibabad, Uttar Pradesh (60,000 MTPA), Khopoli, Maharashtra (162,000 MTPA), and Anantapur, Andhra Pradesh (72,000 MTPA).
Coming into financial highlights, Rama Steel Tubes Limited’s revenue has increased from Rs. 268.27 crore in Q4 FY24 to Rs. 293.20 crore in Q4 FY25, which has grown by 9.29 percent. The net profit has also decreased by 12.81 percent, from Rs. 7.65 crore in Q4 FY24 to Rs. 6.67 crore in Q4 FY25. Rama Steel Tubes Limited’s revenue and net profit have grown at a CAGR of 22.20 percent and 17.66 percent, respectively, over the last four years.
In terms of return ratios, the company’s ROCE and ROE should be 8.50 percent and 6.51 percent, respectively. Rama Steel Tubes Limited has an earnings per share (EPS) of Rs. 0.15, and its debt-to-equity ratio is 0.24x.
Written By – Nikhil Naik
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