The shares of this smallcap compnay surged around 12 percent in Wednesday’s trading session after announcing a strategic collaboration with Onix Renewable Ltd for green and renewable energy.
Price Movement:
With a market capitalization of Rs. 1,735 crores, the shares of Rama Steel Tubes Ltd started Tuesday’s trading session on a flatter note at Rs. 10.54. During the trading session, the shares hit a high of Rs. 11.89, gaining around 12 percent and are currently trading at Rs. 11.62 apiece.
What Happened:
Such a bullish movement in the share price was observed after the company in an exchange filing announced a strategic collaboration with Onix Renewable Ltd., focusing on the development of green and renewable energy solutions, particularly in the solar energy sector.
This partnership aims to leverage Rama Steel Tubes’s expertise in providing high-quality steel structures and components, which are essential for solar projects. These include single-axis trackers that enhance the efficiency of solar panels.
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With this expansion, the company is entering the Green Energy sector and is poised to create new revenue streams, especially as the demand for renewable energy solutions continues to rise.
Management Commentary:
The CEO of Rama Steel Tubes Ltd has indicated that this collaboration will positively affect the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) and solidify its position in the renewable energy market.
Financials:
Looking at the company’s financial statements, the revenue decreased by around 19 percent from Rs. 268.27 crores during the March quarter to Rs. 216.64 crores in the June quarter. On the other hand, the net profits declined by 18 percent from Rs. 7.65 crores to Rs. 6.20 crores during the same timeframe.
Recent Development:
The company has also announced a significant expansion into the defence sector and has incorporated a wholly-owned subsidiary named Rama Defence Private Limited.
The new subsidiary will engage in a broad spectrum of activities within the defence sector, including trading, importing, exporting, manufacturing, assembling, and supplying defence equipment such as arms, ammunition, explosives, and other military and security hardware.
This move marks a strategic diversification for Rama Steel Tubes, as it ventures into a high-growth industry beyond its traditional steel tube manufacturing operations.
Important Financial Ratios:
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 8.69 percent and a return on capital employed (RoCE) of 15.41 percent for the period spanning FY23-24. Further, the net profit margin during FY23-24 was at 2.79 percent.
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Company Profile:
Incorporated in 1974, Rama Steel Tubes is one of the leading manufacturers of Steel Pipes and Tubes, Rigid PVC and G.I. Pipes and square section products in India.
Written By Vaibhav Patil
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