FIIs bought 76,15,502 shares: Multibagger penny stock under Rs 85 with 3,640 per cent returns; PAT jumps 800 per cent QoQ

Their clientele boasts esteemed names like the Airports Authority of India, Delhi Metro Rail, and NTPC.

Rathi Steel and Power Limited, a key player in India's stainless steel manufacturing sector, reported its financial performance for the first quarter of the fiscal year ending June 30, 2024. The company's total revenue for the period reached Rs. 127.73 crores, reflecting a 12.83 per cent decline compared to the same quarter in the previous year. However, on a sequential basis, revenue increased by 7.95 per cent. Despite the revenue dip, the company's profitability surged, with earnings before interest, taxes, depreciation, and amortization (EBITDA) standing at Rs. 5.97 crores, and profit after tax (PAT) reaching Rs. 2.69 crores. This represents a substantial 50 per cent and 800 per cent increase in PAT on a year-on-year and quarter-on-quarter basis, respectively.

Key factors contributing to this strong financial performance include successful cost-reduction initiatives and the completion of a modernization project that enhanced product quality. The company also initiated a groundbreaking cost optimization project, the first of its kind in the stainless-steel wire rod industry in India. While this project is expected to yield significant cost savings, planned plant shutdowns for its implementation impacted production volumes during the quarter. Moreover, Rathi Steel achieved a significant milestone by becoming debt-free and establishing new banking relationships. The company also demonstrated its commitment to sustainability by increasing its reliance on green power through the Indian Energy Exchange, resulting in substantial cost savings.

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.

Today, shares of Rathi Steel and Power Ltd plunged 2.20 per cent to Rs 80.90 per share from its previous closing of Rs 82.68. The stock’s 52-week high is Rs 97.81 while its 52-week low is Rs 11.77.

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 650 crore.

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 11.77 (52-week low) to Rs 80.90 per share, the stock gave multibagger returns of 587 per cent in just 1 year and a whopping 3,640 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. 

Also Read: Suzlon peer company’s stock hit 20 per cent upper circuit & 52-week high with heavy volume: Turns debt-free; bags new 201-MW order; reports turnaround net profit in Q1