This Smallcap iron & steel maker has zoomed over 1700% in just 10 months

Shares of Jai Balaji Industries were locked in the 5 per cent upper circuit for the second straight session on Thursday at Rs 847.95 on the BSE (as of 11: 35 am). 

There were only buyers on the counter. A combined around 195,000 shares changed hands with pending buy orders for a combined 120,000 shares on the NSE and BSE.

In the past four weeks, the stock price of the iron & steel company has surged 44 per cent. In the past 10 months, the market price has catapulted by 1,714 per cent from a level of Rs 46.74 per share.

The company is part of the S&P BSE Smallcap index.

Currently Jai Balaji Industries is trading under the ‘T’ group segment. T group of shares are actively traded but with certain restrictions.

For instance, they have a 5 per cent circuit filter; their price cannot move beyond 5 per cent on either side; they are restricted to trade intraday; only delivery trading is permitted; 'buy today, sell tomorrow' is not permitted in these shares.

Jai Balaji Industries is primarily engaged in the business of manufacturing of iron and steel products including sponge iron, pig iron, ductile iron pipe, ferro chrome, billet, TMT, coke, and sinter with captive power plant.

On December 12, 2023, Jai Balaji Industries said it secured a loan of Rs 559 crore from Tata Capital Financial Services to refinance debt.

A debt agreement with non-banking financial company (NBFC) Tata Capital Financial Services has been executed to retire the existing debt held with two asset reconstruction companies (ARCs), the company said in an exchange filing.

Jai Balaji was on the Reserve Bank of India’s (RBI’s) second list of non-performing assets (NPAs) in 2017-18 mandated for a resolution under the Insolvency and Bankruptcy Code (IBC). It had a debt of about Rs 3,200 crore then.

Chairman and Managing Director of Jai Balaji Industries, Aditya Jajodia said on Wednesday from Rs 3,400 crore peak debt and NPA tag in 2016, the company has now brought debt down to Rs 559 crore and is on course to be zero net debt soon.

“We are investing Rs 1,000 crores in expanding our capacity in ductile iron pipes and high-grade ferro-alloys. All of it will happen from internal accruals,” he said. 

Meanwhile, for the first half (April to September) of the financial year 2023-24 (H1FY24), the company had reported a strong operational performance with its net profit jumping nearly nine-fold to Rs 371.98 crore from a year ago. The company had posted PAT of Rs 57.83 crore during the FY23.

December 2022 onwards, post the withdrawal of the export duty on steel products and iron pellets. This is expected to result in higher export volumes in FY24.

The growth prospects and steel industry outlook in India is favourable.

Recent changes in export taxes and import duties on steel complemented by the rising demand for affordable housing, infrastructure development and construction projects, has led to a pan-India need for steel metal.

Moreover, the government’s initiative to make India self-sufficient has made room for sustainable urban development, construction of proposed logistics parks and industrial corridors – all adding to the meteoric demand for finished steel and steel as a raw material, Jai Balaji said in its FY23 annual report.

There are several opportunities present in other industries also that would directly boost the steel industry outlook. The government’s initiative to redevelop 50 plus existing railway stations and the plan to provide a capital of Rs 2.4 trillion to Railways is likely to scale the need for steel.

An investment of Rs 75,000 crore is planned for 100 plus critical transportation infrastructure projects that will connect ports, coal, steel, fertiliser, and food grain sectors across the first and last-mile delivery network.

This is expected to improve connectivity and transportation services across major points, in turn leading to a rise in demand for steel, the company said.