The shares of Sunflag Iron & Steel Company Ltd. hit a new all-time high of ₹ 162.50 apiece on the National Stock Exchange (NSE) amid heavy volumes. This happened after the company acquired an 11.89% stake in Lloyds Metals.
At 11:47 AM, the stock was trading 6.88% higher at ₹ 160.00 apiece, as compared to a 1.07% decline in the fifty-share NSE Nifty 50. 48.33 lakh shares had changed hands on the counter by that time, as compared to 19.66 lakh shares on the previous day.
Sunflag Iron & Steel manufactures mild steel and alloy steel products. Its product range includes rolled products, billet/bloom, ingots, bright bars etc. of varied shapes and size ranges. They are mainly used in automotive transmission gears, drive shafts, steering systems, bearings, exhaust systems and other engine components.
In the past two days, the share price of the company has appreciated to the tune of 15% after the acquisition. It said that it has exercised its option of conversion of 6 crores 0% OFCDs issued and allotted by LMEL into 60 million equity shares of the face value of ₹1.00 i.e., a conversion ratio of 1:1.
The company has given multibagger returns of 125.67% in the past year as its share price has increased from ₹ 70.90 apiece to the current levels. Therefore, if an investor would have invested ₹ 1 lakh in the company’s shares a year ago, the value of their holdings would have been ₹ 2.25 lakhs today!
Sunflag Iron and Steel is a small-cap company with a market capitalization of ₹ 2698 crores. It has a return on equity of 13.33% and an ideal debt-to-equity ratio of 0.21. Its shares were trading at a price-to-earnings ratio of 2.42 which is significantly lower than the industry P/E of 12.28, indicating that the stock is undervalued as compared to its peers.
Written by Simran Bafna
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