The shares of the iron ore manufacturer gained up to 3 percent in the day’s trade after the company received approval to supply steel billets for structures used in PGCIL projects.
Price movement
With a market capitalization of Rs 12,476.38 crore, the shares of Godawari Power & Ispat Ltd were trading at Rs 186.50 per share, increasing around 1.36 percent as compared to the previous closing price of Rs 184.00 apiece.
Reason for Rise
The shares of Godawari Power & Ispat Ltd have seen bullish movement after Godawari Power & Ispat Ltd steel billets were approved by Power Grid Corporation of India Limited (PGCIL). This approval allows the company to supply billets for PGCIL’s transmission projects, highlighting its product quality on par with major Indian steel manufacturers.
Additionally, the company has been manufacturing Galvanized Fabricated Steel Structures, previously sourcing Steel Billets from major producers like SAIL. Moving forward, it will use its own Steel Billets, resulting in significant cost savings. Notably, GPIL is the only Indian company producing Galvanized Steel Structures from iron ore to the final product.
Financial Performance
Looking forward to the company’s financial performance, revenue decreased by 2 percent from Rs 1,291 crore in Q2FY24 to Rs 1,268 crore in Q2Y25. During the same period, net profit decreased by 38 percent, from Rs 257 crore to Rs 159 crore.
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Recent acquisition
GPIL is acquiring a 51% stake in Jammu Pigments Limited (JPL) for ₹255 crores, valuing JPL at ₹500 crores post-money. Having secured 49%, the remaining 2% depends on compliance. This move aligns with GPIL’s diversification into non-ferrous metal recycling, a low-capex, high-asset-turn business.
Industry Insights
The recycling industry is set for significant growth with BWMR 2022 reducing informal recycling. GPIL views recycling as a sustainable, future-focused business, given India’s non-importer status for non-ferrous metals. Management sees the acquisition as aligning with its sustainability goals and portfolio diversification strategy.
Capacity
JPL, a subsidiary of the company, has a recycling capacity of 196,000 tons, with production dependent on input quality. Management is optimizing utilization and expanding capacity with a ₹200 crore capex. Lower production is due to input quality, not plant capacity, ensuring a strategic focus on efficiency and growth.
Future Outlook
Management is optimistic about the recycling business, driven by growing industrial waste availability and sustainability demands. A strategic acquisition is set to enhance shareholder value and strengthen GPIL’s position in the metals recycling market, reinforcing its commitment to sustainable growth and industry leadership.
Company profile
Godawari Power and Ispat Limited operates through two segments: Steel and Electricity. Its geographic segments include the Domestic Market and the Export Market. The Company is engaged in the iron and steel industry, power sector, and mining sector.
Written by Abhishek Singh
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