Rama Steel issues warrants to Shankar Sharma; stock hits 10% upper circuit

The company allotted 1,625,000 convertible warrants at an issue price of Rs 112.50 each to Shankar Shashi Sharma on preferential basis

Shares of Rama Steel Tubes were locked in the 10 per cent upper circuit band at Rs 116.15 on the BSE on Thursday after the company allotted 1.62 million warrants to investor Shankar Sharma at an issue price of Rs 112.50 per share.

Trading volumes on the counter jumped over three-fold with a combined 1.51 million shares changing hands. There are a combined pending buy orders for 110,589 shares on the NSE and BSE.

The company's board made allotment of 1,625,000 convertible warrants at an issue price of Rs 112.50 each (including premium of Rs 111.50) to Shankar Sharma on preferential basis upon receipt of 25 per cent of issue price from allottee, Rama Steel Tubes said in an exchange filing.

The warrants entitle the allottee to exercise an option to convert and get one equity share of face value of Re 1 each fully paid up against each warrant within 18 months from the date of allotment on payment of the remaining 7 per cent of the issue price, the company said.

In the past three months, the stock has appreciated 58 per cent, as compared to 6.8 per cent rise in the S&P BSE Sensex. Further, in the past one year, it has zoomed 105 per cent, as against 6 per cent decline in the benchmark index. The stock had hit a record high of Rs 133 on August 30, 2022.

Rama Steel Tubes is primarily involved in the manufacturing and trade of steel tubes & pipes & galvanised iron pipes in India as well as in the world.

Meanwhile, in July-September quarter (Q2FY23) of current fiscal, the company reported highest quarterly sales volumes of 48,774.67 tonne. The sales volume for H1FY23 was 78,608.63 tonne compared to 46,698.18 tonne last year. In H2FY23, the sales volume would get further boost from commissioning and ramp-up of new capacity expansion at Khopoli plant, Maharashtra, the company said.

With the expansion of Khopoli plant by 30,000 MT and the setting up of facility in Nigeria by the Company’s stepdown subsidiary, the Company expects the total capacity to increase to 3,00,000 MT by end of FY23. RSTIL (a subsidiary of RSTL) and Huihai Group Ltd., Hong Kong, have inked an exclusive agreement for the supply of specialty steel SKUs totaling 15,000 MT annually in Nigeria.

The Company intends to enter the market for solar energy goods since the current and anticipated capacity increase in solar energy will produce a large demand for steel pipes.

Rama Steel Tubes focuses on business growth opportunities from government programmes like housing for all, affordable housing, smart cities, the national highway development programme, the Swachh Bharat mission, NAL Se JAL, the Jal Shakti Scheme, the RGGVY (Rajiv Gandhi Grameen Vidyutikaran Yojana), the DDUGJY (Deen Dayal Upadhyaya Gram Jyoti Yojana), etc.. Additionally, the company is in the process of entering certain specialised markets, such as the provider of steel pipes and tubes to City Gas Distribution and solar energy power plants.

Favorable macro-economic conditions would increase the Company’s competitiveness given its high brand recognition, PAN India operations, diverse product offering, and wide dealer network. Long-standing relationships with clients and suppliers, in addition to ongoing capacity expansion to include new product lines, will enable the company continue to see stronger growth in the future, Rama Steel Tubes had said in its FY22 annual report.