Shares of this speciality chemicals manufacturing company jumped around 3 percent in Wednesday’s trading session after acquiring a 100 percent Equity stake in Shamli Steel. The shares have delivered around 35 percent to its shareholders in six months.
With a market capitalization of Rs. 570 crores, the shares of Vikas Ecotech Ltd started Wednesday’s trading session on a higher note at Rs. 4.25 compared to its previous close of Rs. 4.15. The shares hit a high of Rs. 4.30, gaining around 3 percent and are currently trading at Rs. 4.25 apiece.
Such a positive movement in the share price was observed after the company in an exchange filing announced that they had signed the agreement to acquire 100 percent Equity in Shamli Steel Private Limited is a company manufacturing Infrastructural Steel (Bars and raw materials) at an enterprise value of Rs. 1,600 million from its existing shareholders in a Share Swap deal.
In addition, the company has also provided Shamli Steels with working capital assistance of Rs.150 million while signing the agreement and will further induce more cash for the working capital requirements to the tune of about Rs. 350 to 500 million during the first 3 to 6 months after taking over the operations of the plant.
Furthermore, the company also mentioned that the new acquisition is capable of contributing an additional Rs. 9,000 million to the gross revenue of the company which is a huge leap from the current levels while on the other hand has the potential to generate Rs. 150 to 200 million of gross profits per annum.
Moreover, Vikas Ecotech stated that the board of directors have approved the enhancement of the power supply connection via a fresh CAPEX of about approx Rs. 90 million while adding a private electric substation for the Shamli Steel unit, which in turn will improve the Gross Margins for Shamli Steels by a significant 50 to 60 percent as compared to the profits generated by Shamli during recent years.
Coming onto the company’s financial statements, the revenue increased by 5 percent from Rs. 57.70 crores in the June quarter to Rs. 60.74 crores during the September quarter. On the other hand, the net profit zoomed by 15 percent from Rs. 1.55 crores to Rs. 1.77 crores during the same period.
Looking at the company’s important ratios, the return on equity (RoE) increased from 0.78 percent during FY 21-22 to 4.09 percent in FY 22-23, and, on a contrasting note, the return on capital employed (RoCE) decreased marginally from 7.06 percent to 6.81 percent during the same timeframe. Furthermore, the net profit margin increased from o.56 percent during FY21-22 to 2.37 percent during FY22-23.
Headquartered in New Delhi, Vikas Ecotech was incorporated in 1984. They are primarily engaged in the business of manufacturing Specialty Chemicals focused on Additives and Specialty Polymer Compounds.
Written By Vaibhav Patil
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
