This stock under Rs.20 which deals in the manufacturing of forged hot, warm and cold, and machined components was up 15 percent after the company approved to set up a new forging plant to increase capacity.
Price Action
With a market capitalization of Rs.313.24 Crores, the shares of LGB Forge Limited were up by 15 percent in the day’s trade touching a day’s high of Rs. 13.50 per share. The stock reiterated from the day’s high and was trading at Rs. 13.25 per share which is 12.96 percent higher than the previous closing price of Rs. 11.73 apiece.
What Happened
The stocks of LGB Forge rose after the company approved to setting up of a new Hot Forging Plant to be situated in Kondampatti Village, Kinathukadavu, Coimbatore to increase the manufacturing capacity of the existing products on December 9th, 2024. The proposed capacity addition is 0.90 million pieces per annum. The period for execution of this proposed capacity is expected to be completed by January 2025. The company plans to fund this initiative through internal accruals and this capacity expansion is beneficial for business growth and expansion.
About the Company
LGB Forge Ltd was established in 2006 as a spin-off from L.G. Balakrishnan & Bros. They specialize in manufacturing high-volume forged components for the automotive and non-automotive sectors which includes electrical and transmission parts.
With operations in Mysore and Coimbatore, the company focuses on hot, warm, and cold forging processes. Their business model prioritizes quality, cost efficiency, and timely delivery to meet global customer demands while expanding its export market presence. LGB Forge aims to improve customer satisfaction and maintain its edge in the industry through continuous developments.
Products and Services
The company produces a variety of forged components while specializing in high-volume automotive parts such as chains, sprockets, and auto tensioners. They do hot, warm, and cold forging processes across its facilities in Coimbatore and Mysore. Additionally, they supply components to non-automotive sectors which include valves and infrastructure equipment.
Financials & Ratios
Its Revenue from operations fell by 19 percent year on year from Rs. 28.78 Crores in Q2FY24 to Rs. 23.38 Crores in Q2FY25, accompanied by a loss of Rs. 1.74 Crores to a loss of Rs. 0.88 Crores.
In terms of Return ratios, it has reported a return on equity (ROE) of -39.3 percent and a return on capital employed (ROCE) of -3.94 percent. It has reported a debt-to-equity ratio of 1.05 as of FY24.
Shareholding Pattern
As of September 2024, the shareholding pattern with the promoter’s stake holding a major share of 73.79 percent in LGB Forge, Domestic Institutional Investors (DII) holding around 0.01 percent, and public holdings standing at 26.20 percent.
Written by Santhosh S
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