This company shares skyrocketed in price in the last one year and comparing its closing price as on June 15, 2020 of Rs. 157 per share on the NSE, the stock after exactly a year today settled at a price of Rs. 1431.9. In the intra-day trade the company from the steel-sponge iron space touched a new 52-week high price of Rs. 1550.05, a remarkable rally of 887 percent. On the BSE, the stock hit a 52-week high of Rs. 1561.95. This is also the stock's all-time high price.
Which is this company that has delivered multibagger returns and why it is rallying?
The company is none other than Chhattisgarh based integrated steel manufacturer, Godawari Power & Ispat Ltd. (GPIL) Before going to the details of why the stock is rallying here are the few key points of the stock:
1. Number of FII/FPI holding in the stock has increased from 8 to 17 in the quarter ended March, though stake has been reduced to 0.62% from 0.65%.
2. MFs have increased holdings from 0.42% to 0.46%
3. Bullish momentum -As the stock is trading above its short, medium and long term moving averages.
4. M-cap of the firm stood at Rs. 5041 crore after the market closing hours as on June 15, 2021
Why Godawari Power stock rallied phenomenally in the last one year?
The firm's encouraging financial performance is one main factor that is fuelling the stock price rally. For the March ended quarter, the firm recorded a sharp 879% growth in profit at Rs. 326.95 crore versus Rs. 33.37 crore in the same quarter during the year ago period. Operating profit (excluding other income) also registered an increase of 214.73% to Rs. 489.63 crore versus Rs 155.57 crore profit in the same quarter of the last fiscal year.
For the FY ending 2021, the net profit at the firm climbed 282.77 percent to Rs. 638.39 crore. Also, net sales at the firm edged higher by 23.82% to Rs. 4071 crore versus Rs. 3288 crore for the FY ending March 2020.
Other developments that triggered price rally in Godawari Power and Ispat include:
1. Shareholders of the company gave an approval to pare its stake/ holding in Godawari Green Energy (GGEL) i.e. an important subsidiary of the steel manufacturing company. GGEL is a SPV, with GPIL as the promoter entity and having an equity holding of 77.82 percent on a fully diluted basis.
2. At its meeting on May 25, the board of Directors of the company approved the plan of setting up a captive Solar PV Power Plant of 250 MW capacity in Raigarh District of Chhattisgarh with a cost outlay of Rs. 750 crores.
3. Furthermore, in March this year, the company got clearance from the Chhattisgarh Environment Conservation Board, Raipur in respect of 'consent to operate' the augmented capacity of iron ore pellet plant as well as consent with regard to setting up manufacturing facilities in other divisions.