Gallantt Ispat hits record high on capex plan; stock zooms 47% in 1 month

Gallantt Ispat shares hit a record high of ₹461.95, as they rallied 9 per cent on the BSE in Tuesday’s intra-day trade. The up move came after the company’s board approved expansion in the capacities of various manufacturing units of the company situated at Gorakhpur, Uttar Pradesh.

 

In the past one month, the stock price of the iron & steel company has zoomed 47 per cent, as compared to the 3.5 per cent rise in the BSE Sensex. In the past one year, the market price of Gallantt Ispat has more than doubled, or gained 110 per cent, as against the 4.5 per cent gain in the benchmark index.

 

 

According to India Ratings and Research (Ind-Ra), the Gorakhpur unit offers various cost advantages, and the unit also benefits from lower import dependency for raw materials, lesser competition from imports, owing to Uttar Pradesh (UP) being a land-locked region, partial coal linkages, own railway sidings and nearness to raw material sources compared to the Kutch unit. Furthermore, the Gorakhpur unit operates in different geographical regions, which have different sensitivities to price movements. In addition, the Gorakhpur unit is the only integrated steel plant in northern India and it almost has a monopoly in the state, and thus, has a price advantage, the rating agency said in rationale.

 

Meanwhile, for the first nine months (April to December) of financial year 2024-25 (9MFY25), Gallantt Ispat reported solid numbers, with its consolidated net profit jumping 119 per cent to ₹284.43 crore from ₹129.94 crore in the same period of FY24. Revenue from operations grew 5.6 per cent year-on-year at ₹3,221 crore, against ₹3,049 crore in 9MFY24.

 

Gallantt Ispat is primarily engaged in the manufacturing of steel (TMT Bars) and allied products including pellets, sponge iron, ingots and generation of power. The company has integrated modem steel manufacturing plants and its final product is TMT Bars under the brand name "Gallantt' and "Gallantt Advance".

 

The management remains confident of the company’s business growth prospects and continues to invest in future growth. The company’s strong order book, with a customer mix of both government departments and private sector enterprises, ensures robust growth in coming years, the management said in its FY24 annual report.

 

The Indian steel industry contributes approximately 2 per cent to the country’s GDP and employs over 2 million people directly and indirectly. With a growing emphasis on infrastructure development, India’s steel consumption is expected to witness robust growth in the coming years. The government’s initiatives, such as the National Steel Policy and ‘Make in India’ campaign aim to enhance the competitiveness of the Indian steel sector and achieve self-sufficiency in steel production, the company said.

 

Meanwhile, Kotak Institutional Equities expects the ongoing tariff war to be price and margin deflationary for all commodities. However, the brokerage firm finds Indian steel producers are relatively better placed than aluminum producers. The brokerage firm expects China to stimulate the domestic economy in 2HCY25E to counter weaker exports, which should improve the real estate and steel cycles. In India, the recent price strength on safeguard duty recommendation suggests strong earnings momentum in the coming quarters, Kotak Institutional Equities said in a metal & mining sector report.