Rs 340 crore contract received: This low PE and high ROE stock stands to benefit from New Education Policy (NEP)

The noteworthy contract was none other than a game-changing deal for the supply of paper dedicated to printing textbooks

In a spectacular display of strength and resilience, the Indian benchmark indices painted a portrait of success on a Wednesday that will not be forgotten. With the Nifty and Sensex soaring to heights that left investors and analysts in awe, closing higher by 0.6 and 0.62 per cent, respectively. What truly captured the attention of the market, however, was the remarkable performance of the broader indices. Among these, the Nifty Small-Cap stood out as a true champion, outshining the frontline indices with a staggering leap of 0.84 percent. The market's vitality was palpable, with the advance-decline ratio decisively favoring the advances, as 1335 stocks glowed in the vibrant green of profits, while only 663 stocks were left in the somber red.

Amidst this fervent buoyancy, there was one small-cap stock that dazzled with an extraordinary gain of over 3 per cent, closing at a remarkable Rs 134. This astounding feat was achieved as the company, none other than Satia Industries (SIL), clinched a major contract that sent ripples of excitement throughout the market.

SIL, a leading titan in the realm of Wood and Agro-based paper manufacturing in India, boasts a fully integrated manufacturing setup, replete with four cutting-edge paper machines, 100 percent in-house power generation, a pioneering soda recovery plant, and one of the nation's finest effluent treatment facilities. The company's prowess in the industry is undeniable, but the recent contract sealed its prominence.

The noteworthy contract was none other than a game-changing deal for the supply of paper dedicated to printing textbooks. Partnerships were formed with Text Book Production and Marketing in Bhuvneshwar, M.P. Text Book Corporation in Bhopal, Rajasthan State Textbook Corporation in Jaipur, and Maharashtra State Bureau of Textbook Production & Curriculum Research in Pune. This colossal contract, valued at over Rs 340 crores, was inked for the immediate requirement of 34,000 metric tons of paper for the printing of books. It symbolizes the unshakeable trust that buyers have in SIL and its potential to meet the surging demand created by the New Education Policy (NEP).

In the first quarter of the financial year 2024, SIL received orders from various states and institutions, including Himachal Pradesh, Telangana, Jharkhand, NCERT, and the DAV committee, totaling approximately 12,000 tons. This avalanche of orders underscores the company's position as a preferred partner in the vital sector of paper production.

The financials of Satia Industries are equally impressive. With a market capitalization of Rs 1,340 crore, it trades at a modest price-to-earnings (PE) ratio of 5.45x. However, what truly sets hearts racing is the astonishing Return on Equity (ROE) at 30 per cent. In Q1FY24, the company reported its highest profit in many quarters, an impressive Rs 84 crore, which more than doubled compared to Q1FY23. The operating profit reached a commendable Rs 149 crore, with operating margins standing tall at 31 per cent. These figures are a testament to the company's unwavering commitment to excellence and its ability to deliver results that exceed expectations.

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