The shares of this smallcap company jumped around 6 percent in Tuesday’s trading session after acquiring Axis CNC machines to enhance its Railways, Defence, and Aerospace segment. In just six months the stock has delivered more than a 200 percent return to its shareholders.
Price Movement:
With a market capitalization of Rs. 8,852 crores, the shares of Balu Forge Industries Ltd started Tuesday’s trading session on a higher note at Rs. 815.20 compared to its previous close of Rs. 800.25.
During the trading session, the shares hit a high of Rs. 886.95, gaining around 6 percent, also recorded as the company’s fresh 52-week high and are currently trading at Rs. 841 apiece.
What Happened:
Such a positive movement in the share price was observed after the company in an exchange filing announced the acquisition of 7-axis CNC machines from a leading German manufacturer. These machines are designed for more advanced applications across various industries, particularly focusing on aerospace, defence, and railways.
The new acquisition will enhance the capability of the company to offer more precision-engineered components and further increase the product portfolio in these key industries.
7 Axis CNC machines are sophisticated tools that allow for intricate and precise machining operations. Unlike traditional machines that typically operate on three or five axes, a 7 Axis CNC machine incorporates additional rotational axes, which significantly increases its capability to perform complex tasks in a single setup.
Financials:
Looking at the company’s financial statements, the revenue increased by 9 percent from Rs. 161 crores during the March quarter to Rs. 175 crores in the June quarter. In addition, the net profits surged by 21 percent from Rs. 21 crores to Rs. 34 crores during the same period.
Prominent Investors:
According to the BSE data, Ace Investor Mr Ashish Kacholia, entering the stock in July 2023, currently holds around 21.90 lakh equity shares equivalent to a 2 percent stake in this company. The current holding value of his investment amounts to over Rs. 176 crores.
Capacity Expansion:
Following recent acquisitions, including a major facility from Mercedes-Benz, Balu Forge’s production capacity is set to increase significantly, from 18,000 TPA to 32,000 TPA, with additional plans to enhance forging capabilities to approximately 72,000 tons.
Moreover, Balu Forge Industries Ltd is strategically positioning itself as a leader in the aerospace, defence, and railways sectors through significant investments in manufacturing capacity and innovation-driven product development.
Important Financial Ratios:
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 16.94 percent and a return on capital employed (RoCE) of 22.02 percent for the period spanning FY23-24. Further, the net profit margin during FY23-24 was 16.73 percent.
Company Profile:
Balu Forge Industries Ltd is engaged in the manufacturing of fully finished and semi-finished forged crankshafts and Forged Components.
The company manufactures and supplies precision-engineered products, crankshafts and forging components that find application across a wide range of end-user industries like automobiles, defence, railways and new energy space.
Written By Vaibhav Patil
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