Surya Roshni hits record high, surges 9% on healthy business outlook

The steel tubes and pipes manufacturer aims to maintain a positive export momentum of value-added products, particularly API pipes, to various regions, despite facing geopolitical challenges.

Shares of Surya Roshni hit a record high of Rs 972.65, as they rallied 9 per cent on the BSE in Wednesday’s intra-day trade on healthy business outlook. The stock of iron & steel products company surpassed its previous high of Rs 934.90 touched on June 28, 2023. It was trading higher for the sixth straight day, surging 19 per cent during the period.

Surya Roshni is the largest exporter of electric resistance welded (ERW) Pipes, largest producer of ERW galvanized steel (GI) pipes and one of the largest lighting companies in India.

On August 11, the board of Surya Roshni approved the sub-division of existing 1 equity share of face value Rs 10 each of the company into 2 equity shares of face value of Rs 5 each held as on the record date.

The rationale behind the stock split is to enhance the liquidity in the capital market to widen the shareholder base and to make the shares more affordable to small investors.

As on June 30, 2023, the promoters held 62.96 per cent stake in Surya Roshni. The remaining 35.95 per cent stakes were with retail investors (21.52 per cent), bodies corporate (7.72 per cent), foreign portfolio investors (4.87 per cent) and others (1.84 per cent).

Meanwhile, with softening of commodity prices and better volume led the company’s earnings before interest, tax, depreciation, and amortisation (Ebitda) improve by 65 per cent year-on-year (YoY) to Rs 116 crore in June quarter (Q1FY24); Ebitda margins improved to 6.2 per cent from 3.85 per cent. Revenue remained flat at Rs 1,875 crore. Profit after tax jumped 166 per cent YoY at Rs 59 crore, on account of reduced finance cost.

On future business outlook, Surya Roshni in its FY23 annual report said steel tubes and pipes manufacturer aims to maintain a positive export momentum of value-added products, particularly API pipes, to various regions, including the Middle East, Europe, and Australia, despite facing geopolitical challenges.

The company intends to increase its market share in GP pipes by participating in the government’s ‘Jal Jivan Mission.’ Furthermore, the company anticipates that due to massive capex spending, there will be a demand for higher thickness and higher gauge material in India. This, in turn, will lead to a peak in demand for the Direct Forming Technology (DFT)-based pipes in the coming years. In addition, the company plans to cater to the ‘inch-to-inch’ pipes market in Canada and the US, resulting in incremental exports.

With strong emphasis of the government on Aatma Nirbhar Bharat Abhiyaan and Vocal for Local and PLI Scheme for LED Lighting Products / Components, higher demand from agriculture, manufacturing, exports and from rural India is expected in future. As company’s major sale comes from rural, semi urban & exports and therefore, going forward, both the segments of the company shall be performing well, the company said.