Stock of this iron & steel products company has zoomed over 100% in 2 mths

Shares of Kalyani Steels (KSL) moved higher by 20 per cent to its new high of Rs 1,077.65 on the BSE in Friday's intraday trade on the back of heavy volumes on healthy business outlook.

In the past two months, the stock price of the iron & steel products company has more-than-doubled, zooming 122 per cent, as it reported strong earnings for the December quarter (Q3FY24).

At 01:18 PM, KSL was trading 18 per cent higher at Rs 1,058.30 as compared to 1.4 per cent rise in the S&P BSE Sensex. Average trading volumes on the counter jumped over 8-fold today with a combined 1.78 million equity shares, representing 4 per cent of total equity of KSL, having changed hands on the NSE and BSE till the time of writing of this report.

KSL is a part of the Pune (Maharashtra)-based Kalyani group. The company is a leading manufacturer of forging and engineering quality carbon and alloy steel, which caters to the requirement of various segments, viz., automotive, oil & gas, energy, bearings, seamless tubes, railways, etc.

KSL is a preferred steel supplier for engineering, automotive, seamless tube and primary aluminium industry used in the automobile and engineering industries. The company benefits from established selling arrangements with approved vendor status from OEMs and arrangements with suppliers for procurement of raw material albeit absence of long-term contracts.

For Q3FY24, KSL reported 67 per cent growth in profit after tax (PAT) to Rs 6.53 crore on the back of healthy operational performance. The company had posted PAT of Rs 3.91 crore in the year-ago quarter.

The domestic demand for alloy steel has improved on the back of strong demand from the auto industry. Going ahead, CARE Ratings expects the margins to gradually improve on the back of continued demand and steady-state raw material prices. The company is likely to sustain stable operating performance owing to continued strong demand from group companies and external customers as well. The company is expected to sustain its strong financial risk and liquidity profile amidst healthy cash flow generation from the operations, the rating agency had said in its rationale.

Last month, KSL signed a Memorandum of Understanding (MoU) with the Odisha government to set up a manufacturing facility with an investment of Rs 11,750 crore. The project for manufacturing titanium metal, aerospace and automotive components and advanced speciality steel at Gajamara in Dhenkanal district will create 10,000 job opportunities, the company had said in a statement.

Meanwhile, KSL has been declared as a successful bidder for acquisition of assets of Kamineni Steel & Power India Private Limited (in Liquidation). The company has accepted the offer on January 10, 2024. Acquisition of assets is to be completed on or before May 7, 2024. Total consideration payable for the acquisition is Rs 450 crore, the company said.