Ratnaveer Precision soars 19% on strong demand; zooms 47% in 5 days

During the year, revenue growth to trend upwards on the back of an improving trajectory in domestic volume growth and higher realisations due to the favourable pricing cycle in key portfolios.

Ratnaveer Precision Engineering share price: Shares of Ratnaveer Precision Engineering (RPEL) hit a new high of Rs 266.90, as the scrip soared 19 per cent on the BSE in Friday’s intra-day trade amid heavy volumes on strong demand outlook. In five trading days, the market price of the iron & steel company has zoomed 47 per cent.

 

RPEL is a Gujarat based stainless steel (SS) product manufacturer focused on producing finished sheets, washers, solar roofing hooks, pipes and tubes. The company operates out of four manufacturing units in Gujarat with total manufacturing capacity stood at 30,000 tonnes as of FY24.

 

 

In the September quarter (Q2FY25), the company’s operational performance remained strong with revenue zoomed 61.4 per cent year-on-year (Y-o-Y) (+ 12.6 per cent quarter-on-quarter (Q-o-Q) to Rs 230 crore. Earnings before interest, tax, depreciation, and amortisation (Ebitda) margin stood at 10.6 per cent (+140 YoY, -139 bps Q-o-Q). Profit after tax increased 54 per cent Y-o-Y (down 1.8 per cent Q-o-Q) to Rs 12.3 crore.

 

RPEL expects consolidated revenue's growth to trend upwards during the year, on the back of an improving trajectory in domestic volume growth and higher realisations due to the favourable pricing cycle in key domestic and export portfolios. The company is actively strengthening its presence in key international markets, contributing significantly to revenue growth. Moreover, it is focusing on developing new revenue streams for the pipes division from the defence sector, a move that promises exciting future prospects.

 

During the half year, the company has implemented capital expenditure for phase 1 to the extent of 80 per cent and COD is expected on January 1, 2025. The company has further planned phase 2 of capital expenditure for which land is identified and implementation to begin from January 2025 onwards. The company has also received substantial orders to the extent of Rs 180 crore which are being executed in the next 3-4 months, RPEL said.

 

The company has also raised Rs 95 crore via preferential allotment of equity shares and warrants and further raising funds to the extent of Rs 325 crore via preferential allotment of equity shares and warrants which shall be utilised for the business expansion, long term working capital requirement and general corporate purpose.

 

At the same time, the company is actively evaluating inorganic growth options in terms of acquisitions which are at an advanced stage and shall contribute significantly in the growth of the company, it added.

 

With strong demand traction, capacity expansions and favourable product mix, analysts at ICICI Securities expect the company's operational performance to improve significantly over the next 2-3 years. The brokerage firm estimated revenue compound annual growth rate (CAGR) at about 24 per cent CAGR over FY24-27E while Ebitda/PAT to grow at about 45 per cent/~47 per cent CAGR over the same period, led by improvement in margins. 

 

The brokerage firm maintained a ‘Buy’ rating on RPEL with a revised target price of Rs 290 (based on 20x P/E to FY26E EPS).