Multibagger Rama Steel Tubes declares 2:1 bonus shares. Details here

During a meeting held today (January 24), the board of directors of Rama Steel Tubes approved the issuance of bonus shares in the ratio of 2:1. However, this decision is contingent upon receiving approval from the members of the company through a postal ballot.

The record date, which will determine eligible shareholders for the bonus shares, will be decided and communicated at a later date, the company said in today's regulatory filing.

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Rama Steel Tubes is one of the leading manufacturers of steel pipes, tubes, and G.I. pipes in India, established in 1974. The company has a 20% export rate and a global presence in more than 16 countries. It has a subsidiary in the UAE and a step-down subsidiary in Nigeria, which has strengthened the company’s presence in global markets.

In December, the company initiated a strategic expansion of 40,000 MTPA through backward integration at its Khopoli plant in Maharashtra. The completion of this expansion is anticipated by the end of Q4 of FY25, with commercial production scheduled to commence thereafter.

The entire capital expenditure (capex) for this expansion is estimated at ₹300 million, and the company plans to fund it through internal accruals.

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In terms of sales volume for the December quarter (Q3FY24), the company recorded 46,919.80 tons, a decrease from 53,216.16 tons in Q3 FY23 and an increase from 35,780.33 tons in Q2FY24. Over the 9-month period of FY24, the company reported a sales volume of 1,31,138 tons, compared to 1,31,824 tons in 9MFY23, which stood almost flat.

The decline in sales volume during Q3 FY24, as per the company's filing on January 02, 2024, was attributed to de-stocking activities in anticipation of a correction in prices. In the initial two months of Q3 FY24, global steel prices experienced a sudden 12–13% fall from peak levels.

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Meanwhile, the company's shares, which were trading at a mere ₹2.90 apiece three years ago, have skyrocketed to trade at the current market price of ₹46.05 apiece, generating a whopping return of nearly 1500%.

Looking at the company's financials, it reported a consolidated net profit of ₹6.58 crore in Q2FY24, a 28.26% increase compared to a net profit of ₹5.13 crore reported in the same period last year. The consolidated revenue from operations during the September quarter came in at ₹203.33 crore as compared to ₹347.24 crore in Q2FY23.

At 02:45 pm, the stock was trading with a gain of 1% at ₹46.05 apiece. 

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