Stock of this railway-related SME company has zoomed 130% in one month

Shares of Cosmic CRF were locked in the 5 per cent upper circuit on BSE at Rs 916.65 in a weak market

Shares of Cosmic CRF were locked in the 5 per cent upper circuit on BSE at Rs 916.65 in Thursday's weak trade. The company's board will meet on Friday to consider fund raising.

In the past one month, the stock of the small and medium enterprises (SME) firm has zoomed 130 per cent from a level of Rs 397.85. In comparison, the S&P BSE Sensex was down 0.42 per cent at 71,204 at 11:00 AM.

The company's board on Friday will evaluate a proposal for raising funds in one or more tranches. 

The company's major products include flap doors and center seal, which are widely acclaimed by railway wagon manufacturing companies including the Indian Railways, along with sheet piles used at brackets for infrastructure works.

Cosmic CRF supplies cold-rolled stainless sections to manufacturing companies. Its client list includes Titagarh Wagons, Hindusthan Engineering, Melbrow Engineering Works, Jindal Rail Infra, Allied Construction, among others.

For the nine months ended December 2023 (H1FY24), Cosmic CRF posted profit after tax of Rs 6.79 crore. The company had posted profit of Rs 6.41 crore in entire previous fiscal 2022-23.

The government has been focusing on boosting infrastructure and over the next few years, railways is expected to come up with large contracts to upgrade both passenger coaches and wagons.

Indian Railways is planning to procure 90,000 wagons by 2025 including 10,000 aluminium wagons at a cost of nearly Rs 1 trillion, a move that will provide a fillip to the domestic wagon manufacturing industry.

The 90,000 wagon procurement plan is the largest in history and it is nearly ten times the number of wagons procured by railways in a year.

The combined manufacturing capacity of rail wagons in India has faced challenges related to the under-utilization of capacities in the past.

This will provide ample orders for the wagon manufacturers and concurrently their vendors and suppliers, resulting in an improvement in the overall capacity utilisation along the value chain to 70-80 per cent in the medium term from a modest sub 40 per cent in the past.

This bulk procurement of is also expected to provide a cost advantage to the government and better revenue visibility in the future.

In the long run, given the government’s efforts to improve infrastructure, demand for freight wagons, commercial vehicles and containers is expected to remain strong, the company said in its FY23 annual report.

Meanwhile, the BSE SME scrips, listed under the "M" group, are traded and cleared & settled on a net basis and for those listed under "MT" group, this is done on gross basis.

BSE said that trades effected in this scrip will be in a minimum market lot (i.e. 400 equity shares) and the same shall be modified by the exchange from time to time by giving prior market notice of at least one month.

As per shareholding patter dated September 30, 2023, the promoters held 72.53 per cent (5.02 million shares) stake in Cosmic CRF.

Out of 27.47 per cent (1.9 million) public holding, the individual shareholders held 24.89 per cent stake in the company, as per latest shareholding pattern data.