Stock of this smallcap iron & steel company has zoomed 225% in 2 months

Shares of Jai Balaji Industries were locked at the upper circuit limit of 5 per cent at Rs 247.55 on the BSE in Tuesday's intraday deals amid heavy volumes. The stock of the smallcap iron & steel products company was quoting at its highest level since January 2011.

The average trading volumes on the counter jumped over four-fold today with a combined 291,000 shares having changed hands on the counter till 1:40 PM, and there were pending buy orders for 225,000 shares on the NSE and BSE.

Thus far in the month of August, the stock has rallied 58 per cent. Moreover in the past two months, it has zoomed 225 per cent. So far in the current calendar year 2023, the stock has skyrocketed 334 per cent as against 6.5 per cent rise in the S&P BSE Sensex.

Currently Jai Balaji Industries is trading under ‘T’ group segment. T group of shares are actively traded at stock exchanges like other shares but with certain restrictions. For instance, they have a 5 per cent circuit filter; their price cannot move beyond 5 per cent on either side; they are restricted to trade in intraday; only delivery trading is permitted; Buy Today, Sell Tomorrow is not permitted on these shares.

Jai Balaji Industries is primarily engaged in the business of manufacturing of Iron and Steel products including Sponge Iron, Pig Iron, Ductile Iron Pipe, Ferro Chrome, Billet, TMT, Coke, and Sinter with captive power plant.

For the June quarter (Q1-FY24), the company had reported strong operational performance with profit after tax jumping nearly eight-fold to Rs 170 crore as against Rs 21.82 crore in the year ago quarter. Revenue from operations, however, declined 0.8 per cent to Rs 1,482.56 crore from Rs 1,494.73 crore in Q1FY23.

According to CareEdge Advisory & Research, the domestic steel demand growth is expected to be healthy at 8-10 per cent in FY24. This will be driven by an increase of 33 per cent year-on-year (YoY) in the government’s budgeted capex on infrastructure development, and an uptick in the real estate and construction industry.

"On the other hand, exports have been increasing on a sequential basis from December 2022 onwards, post the withdrawal of the export duty on steel products and iron pellets. This is expected to result in higher export volumes in FY24. However, the operating profit margins of steel players are expected to remain under pressure in FY24 due to elevated input costs of iron ore and coking coal. International steel prices are also expected to remain range-bound in the near term," Jai Balaji Industries said in FY23 annual report.

The company further said the growth prospects and steel industry outlook in India is favourable. Recent changes in export taxes and import duties on steel complemented by the rising demand for affordable housing, infrastructure development and construction projects, has led to a pan-India need for steel metal. Moreover, the government’s initiative to make India self-sufficient has made room for sustainable urban development, construction of proposed logistics parks and industrial corridors – all adding to the meteoric demand for finished steel and steel as a raw material.