Technocraft Industries hits record high; stock zooms 40% in 5 weeks

Shares of Technocraft Industries hit a record high of Rs 1,271, as they rallied 8 per cent on the BSE in Wednesday's intra-day trade, in an otherwise subdued market.

At 01:40 PM, the stock of the iron & steel company was up 5.5 per cent, as compared to 0.10 per cent decline in the S&P BSE Sensex. In the past five weeks, it has zoomed 40 per cent from a level of Rs 909 on February 7, 2023. Moreover, in the past three months, it has rallied 37 per cent, as compared to 6 per cent decline in the S&P BSE Sensex.

Technocraft is one of the leading manufacturers of drum closures with a worldwide market share of around 36 per cent, excluding China, and caters to major drum manufacturers.

The scaffolding segment comprises scaffolding and formwork business with 70-75 per cent of revenue accruing from the overseas markets. The company has also started manufacturing of sophisticated engineered formwork systems for building, construction and infrastructure projects. The company supplies its products to a diversified set of end markets including oil & gas, power, refineries, petrochemical, infrastructure, and commercial construction.

Last month, Technocraft had bought 1.5 million equity shares at a price of Rs 1,000 per share via buyback offer through tender route. While announcing buyback offer in December 2022, the company had said the buyback may help in improving return on equity, by reduction in the equity base, there by leading to long term increase in shareholders' value.

Meanwhile, Technocraft had said in the December quarter (Q3FY23) quarter update that drum closure business saw pressure on the profit margin due to increased cost of materials, ocean freights, and other inflationary impact on consumables & services along with pressure on demand. The margin also got affected due to disturbance in Europe and other overseas market.

The company said it expects the pressure to ease out in the medium-to-long term. Company's China operation is continuously showing better results. No major capex is planned for this division, other than maintenance capex, in the near future, it added.

CRISIL Ratings believes Technocraft’'s credit risk profile could strengthen from sustained revenue growth and operating efficiency in the textile and scaffolding divisions, and sustenance of their established market position in the drum closure segment.  Its financial risk profile is expected to remain strong, driven by steady revenue growth, healthy debt protection metrics, and cash accruals over the medium term, the rating agency had said in its September rating rationale.