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In Thursday's intra-day trade, shares of iron and steel companies, mainly from the S&P BSE Smallcap index, rose by up to 11% on hefty volumes. This comes after the corporations announced high earnings for the March quarter of fiscal year 2023-24 (Q4FY24). Surya Roshni, Gallantt Ispat, Sarda Energy & Minerals, Welspun Corp, and Vardhman Special Steels (VSSL) all had intra-day gains ranging from 5% to 11% on Thursday.
India's robust economic expansion has benefited the steel industry, and steel consumption is predicted to be boosted by the automobile and consumer durables sectors. The growth prospects and outlook for India's steel sector are promising. Due to recent changes in import and export levies on steel, India has a growing need for steel metal and a growing demand for construction projects, infrastructure development, and affordable housing.
In addition, the government's push to make India self-sufficient has created space for logistics parks, industrial corridors, and sustainable urban development, all contributing to the skyrocketing demand for finished steel and steel as a raw material.
Despite geopolitical challenges, steel tube and pipe manufacturers hope to sustain a strong export momentum of value-added products, especially API pipes, to many countries, including the Middle East, Europe, and Australia. Among the individual stocks, VSSL hit a record high of ₹328.50, as it surged 11% after reporting more than double net profit of ₹32.79 crore in Q4FY24, against ₹13.68 crore in Q3FY23.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 93.93% year-on-year to ₹57.54 crore, mainly due to an increase in higher sales volume by 3.12%. EBITDA per ton for the quarter was ₹11,041. Revenue grew 4% Y-o-Y at ₹439.41 crore.
VSSL is one of India's leading producers of special steels. It caters to the diverse requirements of automotive, engineering, tractors, bearings, and allied industries. The company also meets the steel requirements of select customers for forging applications.
VSSL entered into a strategic alliance with Aichi Steel Corporation (ASC) Japan, Toyota's main material maker. It said that its exports are expected to increase from 5% in FY 2022 to 20-25% by FY27. The Ministry of Environment granted the company environmental clearance for expanding its rolled capacity from 200,000 MT per annum to 280,000 MT per annum.
On the other hand, shares of Gallantt Ispat locked in the upper circuit of 5% at ₹309.25, also its record high on the BSE. In Q4FY24, the company's consolidated net profit jumped 40% YoY at ₹95.39 crore. The company is engaged in the manufacturing of iron and steel and power generation.
Moreover, stocks of Welspun Corp also rallied 7% to ₹604.15 on the back of nearly three-fold jumps in average trading volumes.
Over the past two years, the group has made significant investments in both organic and inorganic avenues while diversifying from its core business of line pipes. These investments include semi-integrated greenfield projects of the DI Pipe and TMT bars segment and the acquisition of Sintex-BAPL, which is expected to provide healthy diversification in its business profile.
While the majority of these investments have shown improvement in scale and profitability quarter on quarter in fiscal 2024, a sustained improvement in scale is expected with ramping up of capacities as well as profitability in these segments over the next fiscal, according to analysts.
Among the other stocks, Surya Roshni shot up 8% to ₹684, and Sarda Energy & Minerals surged 7% to ₹256.70 on the BSE in intra-day trade today. Surya Roshni maintained a robust order book of ₹600 crore from the oil and gas sector and export market. Further, the company has guided for percent and percent volume growth in Q4FY24 and FY25, respectively. The company majorly exports to Saudi Arabia and Egypt in the Middle East. It is also gaining traction in Canada, Europe, Australia, and New Zealand.
Also Read : Domestic demand for steel soars in India, country turns net importer in FY24: CRISIL Report India's steel, aluminium exports to US likely to climb as China faces tariff barrier
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