Steel stock jumps 8% after promoters plans to increase stake by 7% in the Co.

Steel stocks have witnessed an 8 percent surge, driven by the promoters’ decision to increase their stake in the company. This move has boosted investor confidence, further supported by strong expectations of volume growth in the coming fiscal year. With both the stake hike and promising business prospects, the stock has attracted significant attention in the market.

Price Variation

During Thursday’s trading session, shares of Maharashtra Seamless Ltd climbed to an intra-day high of Rs.657.00 per share, rising 8 percent from its previous close of Rs.608.20 apiece. The stock has later retreated to Rs.640.50 apiece. Over the past five years, the stock has delivered over 270 percent returns.

Projects Volume Growth and Stake Increase 

Maharashtra Seamless, a key player in the seamless pipes business, is projecting a volume growth of 7- 8 percent in FY25. The company’s order book is valued at approximately Rs.1,600 crore, with expectations for a significant win in the oil and gas sector by March 2025, further boosting its prospects.

In addition to the business growth, the promoter has recently acquired additional stakes in the company and plans to increase their holding to 75 percent by December 2025, up from the current 68 percent. This move reflects the promoter’s strong confidence in the company’s future performance.

The company’s stainless steel business is also showing strong performance, with expected volumes of 4.35 lakh tonnes for FY25. Furthermore, Maharashtra Seamless anticipates an EBITDA per tonne of Rs.16,500 for its stainless business, showcasing solid profitability in this segment.

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Manufacturing Segments

MSL manufactures a wide array of products, including seamless pipes and tubes such as hot-finished pipes, cold-drawn tubes, boiler tubes, and oil country tubular goods (OCTG). The company also produces ERW pipes, offering mild steel and galvanized pipes, as well as API line pipes. In addition, MSL provides coated pipes with various coatings, including three-layer polyethylene and fusion-bonded epoxy. 

Furthermore, the company produces a range of pipe fittings. Expanding its portfolio, MSL has ventured into the renewable energy sector by investing in wind and solar power generation projects, aiming to reduce energy costs and capitalize on the fiscal benefits offered by renewable energy initiatives.

Financial Performance

For the quarter ending December 2024, the company reported revenue from operations of Rs.1,408 crore, reflecting a 2 percent decrease compared to Rs.1,431 crore in the same quarter of the previous year. Alternatively. Profit After Tax (PAT) fell by 33 percent, reaching Rs.186 crore from Rs.276 crore in the same period.

Ratio Analysis

The Return on Capital Employed (ROCE) of the company stands at 18.57 percent, while the Return on Equity (ROE) is 14.19 percent. 

The company’s Price-to-Earnings (P/E) ratio is 10.82x, below its industry average of 34.7x. Additionally, the company has a good current ratio of 8.33, debt-to-equity ratio of 0.00 and an Earnings Per Share (EPS) of Rs.56.26. 

Company Profile 

Maharashtra Seamless Ltd. (MSL), established on May 10, 1988, is a leading Indian company specializing in the production of seamless steel pipes and tubes. As India’s largest manufacturer of both seamless and electric resistance welded (ERW) pipes and tubes, MSL operates under the prominent D.P. Jindal Group. The company is recognized for its industry leadership and commitment to providing high-quality products across various sectors.

Written by – Siddesh S Raskar

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