The shares of this microcap company locked a 5 percent upper circuit after the company’s Board of Directors approved a forward integration project with an investment of up to Rs 50 crores. The stock has delivered more than a 200 percent return to its shareholders.
Price Movement:
With a market capitalization of Rs. 555 crores, the shares of Rathi Steel & Power Ltd started Tuesday’s trading session on a higher note at Rs. 64.70 compared to its previous close of Rs. 62.38. During the trading session, the shares clocked a 5 percent upper circuit at Rs. 65.49 apiece.
What Happened:
Such a bullish movement in the share price was observed after the company in an exchange filing announced that it plans to invest up to Rs. 50 crores to set up a forward integration project at its existing facility in Ghaziabad. This facility will convert wire rods to downstream products like bright bars/wires etc.
This project is a strategic initiative that will enhance capacity utilization by consuming part of its existing production in-house.
Additionally, this will allow the company to broaden its supply capabilities to sectors such as automotive (including EVs and batteries), defence, solar, engineering, and household products, either directly or through B2B customers utilizing these offerings.
Financials:
Looking at the company’s financial statements, the revenue jumped by 8 percent from Rs. 118.35 crores in the March quarter to Rs. 127.73 crores during the June quarter. On the other hand, the net profits declined by 87 percent from Rs. 20.13 crores to Rs. 2.69 crores during the same period.
Important financial Ratios:
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 21.24 percent and a return on capital employed (RoCE) of 10.62 percent for the period spanning FY23-24. Moreover, during the same timeframe, the net profit margin stood at 4.77 percent.
Shareholding Pattern:
According to the latest shareholding pattern, the Promoters own 40.32 percent of the company’s shares. Domestic Institutional Investors (DIIs) hold 2.89 percent. Foreign Institutional Investors (FIIs) possess 8.95 percent, and Retail Investors hold the remaining 47.84 percent.
Company Profile:
Established in 1971, Rathi Steel & Power Ltd, is a prominent Indian manufacturer specializing in long steel products such as rebars and wire rods, primarily serving the construction sector.
Written By Vaibhav Patil
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