Sunflag Iron hits new high on healthy outlook; stock zooms 58% in one month

The company has received approvals from multiple marquee customers in the aerospace and defence sector for its super alloy-plant commissioned in FY22

Sunflag Iron & Steel shares hit a new high of Rs 307.25, rallied 8 per cent on the BSE in Friday’s intra-day trade, surging 13 per cent in two days on a healthy outlook. In one month, the stock price of this smallcap iron and steel company has zoomed 58 per cent. 

 

At 10:02 AM, Sunflag Iron & Steel was trading 7 per cent higher at Rs 305.55, as compared to the 0.54 per cent decline in the BSE Sensex. The counter has seen huge trading volumes, with a combined 3.2 million equity shares changing hands in the first 45 minutes of trading on the NSE and BSE.

 

Sunflag Iron & Steel is engaged in the business of manufacturing and sale of special steel rolled products. Its manufacturing facility is located at Bandara, Maharashtra.

 

The company’s super alloys steel manufacturing facility caters to requirements related to commercial and fighter jet parts, defence equipment, space vehicles, nuclear reactors, advanced ultra super-critical power plants, industrial and vehicle gas turbines, petro-chemical plants and other high temperature and corrosive applications. This will enable the company to reduce its dependency on automotive and auto ancillary industries and create an opportunity for the expansion and foray into new markets.

 

The company is an approved vendor to VSSC, LPSC, HAL, Brahmos, DRDO, Collins Aerospace and GE Gas & Power; and it has received orders for supply of high-quality aerospace steels and Ni (Nickel) alloys.

 

For the super alloy-plant commissioned in FY22, the company has received approvals from multiple marquee customers in the aerospace and defence sector. The company has been delivering test samples and the major revenues are expected to kick start in this segment from FY26 onwards, where-in the operating margins are expected to be healthy, according to CARE Ratings.

 

In accordance with the industry scenario, where a majority of the steel players have seen a fall in the price realisations during the first half (April to September) of the financial year 2024-25 (H1FY25), the blended sales realisations for SISCL have come down from Rs 80,226 per tonne in FY24 to Rs 76,713 per tonne in H1FY25.

 

Going ahead, the rating agency expects volumes for the company to increase for FY25, given that it has already delivered 2.0 lakh metric tonnes of rolled products during H1FY25, resulting in a computed annual run-rate of around 4 Lakh tonnes (vs 3.55 Lakh mtpa during FY24).

 

CARE Ratings has a stable outlook on Sunflag Iron & Steel, as they believe the company will continue to derive stable revenues and cash flows due to its established position in the market and long-standing customer relationships and repeat orders as well.  The company receives consistent orders from major automobile OEMs, ordnance factories and government entities, for the supply of alloy-steel products. Furthermore, the company's financial risk profile is expected to remain comfortable, given that the company has recently completed its capacity expansion for the blooming mill and super-alloy plant.