GHCL stock up 12% day after dip in Q1 net; here's what triggered the rally

GHCL has been allotted 6,449 hectares of land in Kutch for salt production on a 30-year lease; stock up 40 per cent so far in FY25.

GHCL stock soared to a high of Rs 628.50 - up 11.6 per cent in intra-day deals on Friday, in an otherwise weak market, day after announcing a drop in Q1 net profit. 

GHCL on Friday, in an exchange filing, reported a sharp 64.7 per cent decline in Q1 net profit at Rs 150.55 crore for the quarter ended June 2024 when compared with Rs 426.25 crore in the quarter ended June 2023. The year-ago quarter profit included an exceptional gain of Rs 219.28 crore.

Total income at the counter declined 17.5 per cent year-on-year (YoY) to Rs 848.66 crore as against Rs 1,029.14 crore in the same comparable period. EBITDA came in at Rs 235 crore, an increase of 17 per cent when compared with Q4FY24, but a decline of 24 per cent as against Q1FY24.

Commenting on the financial performance, R S Jalan, Managing Director of GHCL said, we have commenced the year on a strong footing, marked by stable revenues and a 17 per cent improvement in EBITDA. While the global soda ash market exhibits a mixed outlook with strong demand in certain places but with overall weaker pricing, we are encouraged by the positive trends in India.

"Domestic consumption is robust, driven by demand from key segments like detergents and glass. The expanding solar glass industry is also creating new opportunities for us. The recent imposition of a 10% import duty on solar glass in the Union Budget is a positive development that will further strengthen the domestic soda ash market.” Jalan added.

Yesterday post results, the stock witnessed sharp volatility, as it swung between a high of Rs 576 and a low of Rs 538, before settling with a 0.6 per cent gain at Rs 563.

Meanwhile, today on the bourses, at 11.05 AM, GHCL stock traded with a solid gain of 11.3 per cent at Rs 627. The counter has seen a near 9-fold jump in volumes, with trades of around 2.48 lakh shares as against the two-week average volume of around 28,000 shares on the BSE. In comparison, the BSE Sensex was down 0.8 per cent or 650 points at 81,211 amid the global sell-off.

So here's what possibly driving the rally in GHCL

The company in a late evening exchange filing on Thursday said, it was allotted a huge parcel of land on lease for salt production.

"GHCL Limited (the Company) has been allotted 6,449 hectares of lease land at Zara Zumara, Kutch for salt production." GHCL said in the release.

As per the release, the agreement executed on August 1, 2024, is valid for a period of 30 years.

This is a significant milestone for the company and once the same is developed, will cater to salt requirement for upcoming Soda Ash Greenfield project at Kutch and also for bromine expansion, the release stated.

GHCL is engaged in the manufacture of Soda Ash (Anhydrous Sodium Carbonate), that is a major raw material for detergents & glass industries and Sodium Bicarbonate (baking soda). Through a demerger it has separated its spinning business into GHCL Textiles Limited, which will continue to produce multiple varieties of fibre (yarn), sold to domestic consumers as well as exported worldwide.

GHCL stock has had a fabulous run on the stock exchanges so far this financial year. The stock has rallied 40 per cent in just little more than four months so far. In spite of strong gains, the stock is still 20 per cent away from its 52-week high of Rs 659.