FIIs Bought 76,15,502 Shares: Multibagger Penny Stock Under Rs 70 Hit Upper Circuit As Company To Expand Product Portfolio By Setting Up Forward Integration Project

From Rs 20.35 (52-week low) to Rs 68.76 per share, the stock gave multibagger returns of 238 per cent in just 1 year and a whopping 1,620 per cent in 5 years.

Today, shares of Rathi Steel and Power Ltd gained 5 per cent to Rs 68.76 per share from its previous closing of Rs 65.49 with a 2 times spurt in volume. The stock’s 52-week high is Rs 97.81 while its 52-week low is Rs 20.35.

Rathi Steel and Power Limited (BSE: 504903) is embarking on a significant expansion project to enhance its value chain. The company has announced plans to invest up to Rs. 50 crores to establish a forward integration facility at its existing Ghaziabad location. This facility will transform wire rods into downstream products like bright bars and wires, broadening the company's product offerings and catering to a wider range of industries.

This strategic initiative holds several key advantages for Rathi Steel and Power. By consuming a portion of its existing production in-house, the company can optimize capacity utilization and reduce reliance on external markets. Moreover, the expansion will enable Rathi to tap into high-growth sectors such as automotive, including electric vehicles and batteries, defence, solar, engineering, and household goods. This diversification will strengthen the company's market position and create new revenue streams, either through direct sales or by supplying to B2B customers who utilize these products in their operations. The project will be implemented in phases, considering technical and commercial viability as well as market dynamics.

About the Company

Incorporated in 1971, Rathi Steel and Power Limited manufactures and supplies steel and steel-related products. The company specializes in stainless steel products like Wire Rods, flats etc., which are primarily used in infrastructure, engineering, and household applications. Rathi operates a plant in Ghaziabad, UP, with an installed capacity of 2,00,000 tons per annum or rolling capacity. The Company also operates a steel melting shop with an installed capacity of over 90,000 tons per annum to manufacture stainless steel billets.

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Rathi Steel and Power Limited reported a total revenue of Rs 127.73 crore in Q1FY24, a 12.83 per cent decline YoY but a 7.95 per cent increase QoQ. Despite this, EBITDA surged to Rs 5.97 crore and PAT reached Rs 2.69 crore, representing a 50 per cent and 800 per cent increase YoY and QoQ, respectively. Factors contributing to this include cost-reduction initiatives, a modernisation project and a pioneering cost optimisation project. The company achieved debt-free status, established new banking relationships, and increased its reliance on green power. In FY24, the company reported net sales of Rs 492.83 crore and a net profit of Rs 23.61 crore, overcoming economic downturn, raw material shortages and intense competition.

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 20.35 (52-week low) to Rs 68.76 per share, the stock gave multibagger returns of 238 per cent in just 1 year and a whopping 1,620 per cent in 5 years. Investors should keep an eye on this micro-cap stock.

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