Stock of this industrial minerals PSU has zoomed nearly 300% since Apr 2023

Shares of Gujarat Mineral Development Corporation (GMDC) rallied 11 per cent to a new high of Rs 502.15 on the BSE in Tuesday’s intra-day on the back of heavy volumes.

The state-owned GMDC on Monday said that it has received a green nod to expand the capacity of its Surkha lignite mine in Gujarat. The enhanced lignite production capacity is likely to drive substantial revenue growth, it said.

The environment clearance was accorded by the govt for expanding the capacity of Surkha (N) lignite mine from 3 million tonnes per annum (MTPA) to 5 MTPA.

GMDC caters to nearly 25 per cent of the total demand of minerals in Gujarat with a diversified customer base comprising small and medium-sized companies spread across textiles, steel, cement, power generation and various other sectors.

Demand for Lignite is expected to remain stable in the medium term driven by demand from thermal power, textile, steel, cement, and other industries.

Moreover, India is heavily dependent on imported coal, which is a substitute for lignite. In order to reduce the dependency on import of coal, the government is focussing on development of lignite and coal mines domestically.

At 09:55 AM; GMDC was trading 7 per cent higher at Rs 484.40 as compared to a 0.38 per cent rise in the S&P BSE Sensex.

The average trading volumes on the counter jumped over three-fold today. A combined 13.38 million equity shares, representing 4.2 per cent to total equity of GMDC, changed hands on the NSE and BSE.

Meanwhile, since April 2023, the market price of GMDC has zoomed nearly 300 per cent from a level of Rs 126.55 on March 31, 2023.

The Surkha (N) lignite mine holds strategic importance for GMDC, representing a significant leap forward in the company's growth trajectory.

"The approval for the capacity expansion of Surkha (N) lignite mine is a pivotal moment for GMDC. This project's success is integral to our overall growth and revenue generation perspective," the company's Managing Director Roopwant Singh said.

The expansion of lignite production annually is poised to fuel the energy needs of industries across Saurashtra and Gujarat, fostering robust growth and development across various sectors within the state, he added.

The company is operating 5 lignite mines, located in Kutch, South Gujarat and Bhavnagar, with estimated reserves of 95 million tonnes.

During FY23, the company worked on newly allotted 6 new lignite blocks with combined lignite reserves of 360 million tonnes.

The operationalisation of these 6 new mines, with total lignite reserves of 360 million tonnes, will add to the company’s capacity in 4-5 years.

 “We will continue benefiting from higher production, supported by steady demand from manufacturing industries located in Gujarat. The increased production from these new mines will facilitate us in catering to at least 30-35 per cent of total demand by FY25,” GMDC said in its FY23 annual report.