Shares of Gallantt Ispat Limited plunged more than 18 percent today and currently trade at Rs 50.60. It is a small-cap company with a market capitalization of Rs 1,811 crores.
The prime factor contributing to such a drop in the stock prices is the Income Tax search operation conducted at the plant office and factory premises of the company. Moreover, other business offices and residential houses of the Promoters and Officers were also covered in the search operation.
The I.T. Department has seized a few documents and records of the company for further processing.
Gallantt Ispat Limited is engaged in the process of manufacturing steel products. Operating segments of the company include Steel, Power, Agro, and Real Estate. It generates a majority of its revenue from the ‘Steel’ segment. The product range offered comprises M.S. Billet, Sponge Iron, Re-rolled products (TMT Bars), and Wheat products.
Having a quick glance at the company’s financials, there are movements in opposing directions as far as the revenues and net profits are concerned. Revenues, on one hand, have moved up from Rs 931 crores in Q2 to Rs 1,006 crores in Q3, and net profits, on the other hand, have taken a shift downwards from Rs 28 crores to Rs 21 crores during the same period.
The basic profitability ratios of the company such as the return on equity (ROE) and return on capital employed (ROCE) have dipped in recent financial years. ROE shifted down from 13.25 percent in FY20-21 to 9.59 percent in FY21-22. ROCE too reduced from 14.51 percent to 10.82 percent keeping the timeframe the same.
The debt-to-equity ratio, on a positive note, has reduced over the past 3 financial years with the most recent movement from 0.22 during FY20-21 to 0.2 in FY21-22.
Written by Amit Madnani
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