One of the small-cap stocks engaged in the business of mining iron ore and manufacturing iron ore pellets, sponge iron, steel billets, wire rods, H.B. wire, and ferro alloys with the generation of electricity. The stock is in focus after acquiring a 51 percent stake in Jammu Pigments Limited valued at around Rs. 254.52 crore.
Stock Movements:
With a market capitalization of Rs. 12,158.62 crores, the shares of Godawari Power and Ispat Limited jumped to an intraday high at Rs. 191.15 per equity share, rising nearly around 2.77 percent from its previous day’s close price of Rs. 186. Since then, the share has retreated and is now trading at Rs. 181.80.
What Happened:
Godawari Power and Ispat Limited (GPIL) has entered into definitive transaction documents with Jammu Pigments Limited (JPL) and its promoters to acquire up to 51% stake on a fully diluted basis.
The transaction was valued at Rs. 254.52 crore and will be executed through a combination of subscriptions to compulsorily convertible preference shares (CCPS) worth Rs. 175 crore and the acquisition of 26,77,506 equity shares from JPL’s promoters for approximately Rs. 79.52 crore.
The transaction is expected to be completed by March 31, 2025, subject to the fulfillment of certain conditions precedent. This strategic acquisition will further strengthen GPIL’s presence in the pigments business and diversify its product portfolio.
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Business Segments:
Godawari Power and Ispat Limited operate in two key segments, which include steel production, offering diverse products like sponge iron, steel billets, mild steel wires, ferro alloys, pig iron, and iron ore pellets, and power generation, utilizing captive power plants with a total generation capacity of 53 MW to support operations efficiently.
FY25 Guidance in Capacity:
Godawari Power and Ispat Limited has revised its guidance for iron ore mining to 2.35 MnT, down from the previous 3.0 MnT. This revision is due to heavy rains and a delay in approval for capacity expansion at the Ari Dongri Mines.
The company has provided guidance for various other products as well, including iron ore pellets (2.44 MnT), sponge iron (0.594 MnT), steel billets (0.50 MnT), ferro alloys (80,000 T), and rolled products (0.325 MnT). The performance achieved so far in FY25 varies between 46% to 61% across these different product categories.
Recent quarter results and ratios:
Godawari Power and Ispat Limited’s revenue has decreased from Rs. 1,291 crore in Q2 FY24 to Rs. 1,268 crore in Q2 FY25, which has down by 1.78 percent YOY. The net profit of Godawari Power and Ispat Limited has also been down by 38.13 percent, from Rs. 257 crore in Q2 FY24 to Rs. 159 crore in Q2 FY25.
Godawari Power and Ispat Limited’s revenue and net profit have grown at a CAGR of 13.60 percent and 51.64 percent, respectively, over the last four years.
In terms of return ratios, the company’s ROCE and ROE should be 29.2 percent and 21.9 percent, respectively. The debt-to-equity ratio of the company is to be 0.01x. Godawari Power and Ispat Limited’s EPS is to be Rs. 13.2.
Company Overview:
Godawari Power and Ispat Limited (GPIL) was established in 1999 as Ispat Godawari Ltd. GPIL is part of the Hira Group and has its headquarters in Raipur, Chhattisgarh. The company is an integrated steel manufacturing company based in India, primarily engaged in the production of various steel products and power generation.
Written By – Nikhil Naik
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