1 Smallcap Steel Stock Rises 1,450% In 1 Year, From Rs 55 To Rs 850; Turned Rs 50,000 To Rs 7.75 Lakh Corpus

Iron and steel products manufacturer, Jai Balaji Industries is a special stock. Part of a smallcap basket, in a year, Jai Balaji has been a gold mine for its investors, rising from levels of nearly Rs 55 to reaching nearing Rs 850 and giving more than 1,450% returns. That is almost like winning a lottery at a cheaper price. Because even an investment of merely Rs 50,000 in Jai Balaji a year ago, will now take their corpus to a whopping over Rs 7.75 lakh.

This will be a humungous gain, far better than record highs of Sensex and Nifty, and even traditional investment schemes like FDs have gained traction after an aggressive rate hike cycle from 2022 to the first quarter of 2023.

On January 4th, Jai Balaji's stock price touched a new height by hitting a 52-week high of 847.95 apiece on BSE. This will also be the 5% upper circuit, which meant that Jai Balaji had several buyers but no sellers on Thursday. Its market cap touched at Rs 13,605.38 crore.

Jai Balaji shares have hit a 5% upper circuit for a second trading session in a row on BSE. The stock has been in green for three consecutive days in a row on NSE.

A year ago, Jai Balaji's share stood at Rs 54.75 apiece. But by the end of January 4, 2024, due to a strong bullish trend, the stock has now skyrocketed by 1,450.18% on BSE.

For instance, if an investor had infused up to Rs 50,000 for buying Jai Balaji shares on January 4, 2023, their investment value would have risen to Rs 7,75,090, which would be a gain of Rs 7,25,090 in 1 year.

The reason behind the strong upbeat in Jai Balaji shares is because of the company's ambitious capacity expansion in focus areas.

Jai Balaji Industries chairman and managing director Aditya Jajodia said: "Jai Balaji Industries is a turnaround story that is unique in iron and steel. From Rs 3400 crore peak debt and NPA tag in 2016, we have now brought debt down to Rs 559 crore today. We are on course to be a zero net debt company soon." "We are investing Rs 1,000 crore in expanding our capacity in ductile iron pipes and high-grade ferroalloys. All of it will happen from internal accruals," he added.

The company has drawn up an ambitious plan to invest Rs. 1000 crore through internal accruals in expanding its capacity in ductile iron pipes and high-grade ferroalloys. The Kolkata-based iron and steel company, which had been classified as NPA in 2016, with Rs. 3400 crore debt on its books, has been able to turn around in the last three years, by continuously reducing debt and focusing on these two products. The company also plans to reduce its debt to zero at the net level in the next two years.

The company aims to expand its capacity to 6.5 lakh tonnes in ductile iron pipes from the current 3 lakh tonnes. It targets to expand the capacity of high-grade ferro alloys to 72,000 tonnes, which is more than double that of the 30,000 tonnes.

Jai Balaji also tied up with biggies like Tata. In mid-December, Jai Balaji announced a debt agreement with Tata Capital to replace the debt on its book held by Asset Reconstruction Companies. The Rs 559 crore borrowed from Tata Capital at a 12% rate of interest is now the only debt on the books of Jai Balaji Industries. The full impact of the capacity expansion is expected to play out in FY26.

Also, Jai Balaji now has a 10% share of the DI pipes market in India which is key to the Jal Jeevan Mission of the central government. Through the capacity expansion, it aims to increase its share to 20%. It already sells its DI pipes across India, with Maharashtra being the largest customer right now. It has a total order book of Rs 1800 crore in DI pipes.

In High-Grade Ferro alloys the company has hit exports sweet spot and is offering its products to high-grade steel makers in India and around 40 countries across the world.

In FY23, the company posted a total income of Rs 6160.56 crore and a net profit of Rs 57.60 crore. The profitability showed a marked improvement, when it declared a net profit of Rs 170.43 crore for Q1 of FY23, and then followed it up with a net profit of Rs 201.56 crore for Q2FY23. The H1FY23 net profit is Rs 371.99 crore and the total income for H1FY23 is Rs 3029.20 crore.

The company has eight integrated steel manufacturing units spread across India in the states of West Bengal, Chhattisgarh, Orissa and Jharkhand, and a diverse portfolio of value-added products including DRI (Sponge iron), Pig iron, Ferro Alloys, Alloy and Mild Steel Billets, Reinforcement Steel TMT Bars, Wire Rods, Ductile Iron Pipes, and Alloy and Mild Steel Heavy Rounds, with a combined capacity of 27,40,000+ tonnes per annum, making it one of the largest steel manufacturers in the private sector in Eastern India.