Debt-free multibagger penny stock under Rs 75 hit upper circuit as Company moves to direct charging method to produce wire rods; details inside!

Debt-free multibagger penny stock under Rs 75 hit upper circuit as Company moves to direct charging method to produce wire rods; details inside!

Kiran Shroff

From Rs 10.89 (52-week low) to Rs 71.93 per share, the stock gave multibagger returns of 560.5 per cent in just 1 year.

Today, shares of Rathi Steel and Power Ltd hit a 5 per cent upper circuit to Rs 71.93 per share from its previous closing of Rs 68.51. The stock’s 52-week high is Rs 97.81 while its 52-week low is Rs 10.89.

Rathi Steel and Power Limited, a prominent Indian stainless-steel manufacturer, has taken a pioneering step by implementing the direct charging method for producing wire rods. This innovative approach involves feeding molten steel directly into the rolling process, bypassing the traditional reheating stage. By eliminating this energy-intensive step, the company aims to significantly reduce fuel consumption, minimize yield loss, and consequently decrease its carbon footprint. This strategic move positions Rathi Steel and Power as a leader in sustainable steel production, as the direct charging method has primarily been employed in the carbon and mild steel industry until now.

The advantages of direct charging extend beyond environmental benefits. By streamlining the production process, Rathi Steel and Power can optimize resource utilization, including manpower and machinery, leading to substantial cost reductions. Moreover, the company gains greater control over production costs and pricing, ultimately enhancing profit margins. This technological advancement underscores Rathi Steel and Power's commitment to operational efficiency and financial performance while contributing to a cleaner and greener future.

About the Company

Established in 1971, Rathi Steel and Power Ltd, a Delhi-based steel manufacturer, offers Rebars and Wire Rods under the "RATHI" brand across 1,000 retail outlets and also supplies stainless steel products to major producers of downstream goods like Bright Bars and fasteners. Their clientele boasts esteemed names like the Airports Authority of India, Delhi Metro Rail, and NTPC. The company has a market cap of over Rs 600 crore.

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According to Quarterly Results, the net sales increased by 17 per cent to Rs 118.35 crore and net profit increased by 2,457 per cent to Rs 20.20 crore in Q4FY24 compared to Q3FY24. In its annual results, the company reported net sales of Rs 492.83 crore and a net profit of Rs 23.61 crore in FY24 while in FY23, the company reported net sales of Rs 726.55 crore and a net profit of Rs 87.47 crore. Rathi Steel overcame significant hurdles including economic downturn, raw material shortages, and intense competition to achieve a remarkable turnaround in FY24. Through strategic restructuring, debt repayment, and a shift towards high-margin stainless steel products, the company eliminated debt and positioned itself for future growth.

In June 2024, FIIs bought 76,15,502 shares or 8.95 per cent stake in the company. The promoters of the company own a 40.32 per cent stake, FIIs own 8.95 per cent, DIIs own 2.89 per cent and the public owns a 47.85 per cent stake as of June 2024. From Rs 10.89 (52-week low) to Rs 71.93 per share, the stock gave multibagger returns of 560.5 per cent in just 1 year. Investors should keep an eye on this micro-cap stock.

Disclaimer: The article is for informational purposes only and not investment advice. 

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