Multibagger Penny Stock: Rama Steel Tubes, a leading manufacturer of branded steel products in India, has delivered phenomenal returns to its shareholders as its shares have maintained a steady upward trajectory in recent years, significantly multiplying investors' wealth in a very short period.
The company’s shares have risen from ₹4.52 to the current level of ₹12.35 over the last three years, translating to an impressive gain of 160%. Additionally, the stock has generated a massive return of 1,800% over the past five years, moving from Re 0.65.
This stellar rise in shares can be attributed to the company's healthy financial performance, focusing on expanding its presence in new locations, broadening its product range, diversifying into different industries, strengthening manufacturing facilities, focusing on reducing debt, and also the rise in demand for steel tubes, which all helped the stock to deliver massive returns.
Additionally, the retail shareholder base of the company has increased from 72,757 shareholders in December 2023 to 845,598 shareholders in December 2024, collectively owning a 40% stake in the company, as per Trendlyne data.
In FY24, the company partnered with Onix Renewable to provide essential steel structures, including single-axis trackers and future dual-axis trackers, for solar projects undertaken by Onix Renewable. The company is now focusing more on the solar energy market, driven by the growing global emphasis on clean energy.
As more countries set clean energy targets, the solar energy sector is expected to expand, increasing the demand for steel pipes. Additionally, Rama Steel Tubes is targeting steel pipes and tubes for city gas distribution. The company is also upgrading its solar panel installation at its Mumbai (Khopoli) facility.
Furthermore, the company entered the defence sector with the establishment of Rama Defence Private Limited. Recently, the company released its sales volume data for 9MFY25 and Q3FY25. It registered a sales volume of 51,669.01 tons in Q3FY25, compared to 50,921.67 tons in Q2FY25 and 46,919.80 tons in Q3FY24.
For 9MFY25, the company reported a sales volume of 139,956.23 tons, compared to 131,137.81 tons in 9MFY24, as per its regulatory filing.
Rama Steel Tubes manufactures and trades steel tubes, pipes, and galvanised iron pipes, including G.I. pipes, MS pipes, and STP poles. It has a strong presence in the domestic market and operations in 16 countries across four continents. As of March 31, 2024, the company’s total installed capacity stood at 294,000 metric tonnes, as per the company's latest annual report.
Its marquee clients include SAIL, GAIL, Reliance Industries, Airtel, BSNL, BSES Rajdhani Power Limited, Gujarat Gas Limited, J&K Rural Electrification, Purvanchal Vidyut Vitran Nigam Limited, UP & Uttarakhand Peyjal Nigam, L&T, GMR, DLF, Tata, Adani, Ashok Leyland, and HPCL Bhatinda & Mangalore Refinery Project, among others.
The company aims to add 10 new SKUs each month, with a goal of expanding its product range to 2,500 SKUs by FY 2025-26. By March 31, 2024, it had established connections to most Indian cities through over 300 dealer points and more than 1,400 SKUs.
The company has also planned to increase its total installed capacity to 500,000 metric tonnes by FY 2025-26. Additionally, it plans to allocate at least 25% of its production capacity to meet government sector demands in the coming years, with these products expected to achieve an EBITDA margin of 9%-10%.
The Indian steel pipes and tubes market was valued at USD 32.9 billion in 2023 and is projected to grow at a CAGR of 6.4% from 2024 to 2030, with the market size expected to reach USD 37.7 billion by the end of the forecast period, signalling strong growth potential.
By volume, the Indian steel pipes and tubes market was estimated at 7.0 million tons in 2023 and is projected to grow to 7.7 million tons by 2030. The sector accounts for about 8% of the country’s total steel consumption.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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