Surya Roshni soars 28% in 2-days, hits new high on FPI stake purchase

Recently, Employees Retirement System of Texas - Self Managed Portfolio bought 427,789 equity shares representing 0.79 per cent stake in the company

Shares of Surya Roshni hit a new high of Rs 840, on rallying 8.5 per cent on the National Stock Exchange (NSE) in intra-day trade on Monday. The stock has soared 28 per cent in past two trading days, after the foreign portfolio investor (FPI) bought 0.79 per cent stake in the company via open market.

On Friday, 17 September, 2021, Employees Retirement System of Texas – Self Managed Portfolio purchased 427,789 equity shares representing 0.79 per cent stake in Suyra Roshni at price of Rs 720.83 per share on the NSE, the bulk deal data shows. The name of seller is not ascertained immediately.

In past one week, the stock has rallied 45 per cent, as compared to 1.2 per cent gain in the S&P BSE Sensex.

Surya is the second-largest manufacturer of steel pipes (contributes 67 per cent to EBITDA) and also the second-largest LED manufacturer in India. In the April-June quarter (Q1FY22), Surya reported a 64 per cent year-on-year (YoY) jump in revenue at Rs 1,453 crore. The company’s earnings before interest, taxes, depreciation and amortisation (Ebitda) had grown by 112 per cent YoY to Rs 93 crore and cash profit registered a growth of 221 per cent to Rs 76 crore.

The company’s strong order book of Rs 847 crore for API coated pipes as of Q1FY22 will be one of the key growth catalysts. The commissioning of the 72,000 MTPA capacity for large dia section pipes (up to 300 X 300 mm) with direct forming technology (DFT) at Gwalior unit by next quarter will also aid the growth momentum, the company said.

In steel pipes & strips business having achieved the highest ever EBITDA per cone of Rs 5,033in Q1FY22, out export market is picking up pace and is expected to grow more than 30 per cent in the current year, said Raju Bista, managing director, Surya Roshni. “As the number one Indian manufacturer of GI pipes, the company is witnessing a healthy order book of about Rs 1,000 crore in hand for API coated catering to the oil & gas sector, & exports due to demand picking up with the easing of Covid globally,” said Bista.

“With a focus on improvement in product mix in steel pipes segment, we expect margins to improve over the next two-three years. In Lighting & Consumer Durables segment, we anticipate strong growth in segment revenue led by rising demand for LED lights in India and also import substitution,” the brokerage firm IDBI Capital said in its initiate coverage report on Surya Roshni.

Surya has entered home appliances in the past five years. "We expect this segment to record strong growth given the strong distribution network of Surya. Historically, Surya’s return ratios have been lower due to various reasons such as weaker product mix, falling LED prices, etc. Nevertheless, we expect strong improvement in its return ratios over FY21-FY23," the company added.

At 12:27 am; the stock was trading 6 per cent higher at Rs 817.70 on the NSE, as compared to 0.27 per cent decline in the Nifty50 index. A combined 2.3 million equity shares were changing hands on the counter on the NSE and BSE.