Penny stock under ₹15: Rama Steel Tubes share price hits 20 per cent upper circuit, rises 32 per cent in two days

Shares of Rama Steel Tubes, a leading manufacturer of branded steel products in India, continued their bullish trend for the second consecutive trading session, hitting the 20 per cent upper circuit limit today at ₹14. This follows a 10 per cent increase in the previous session, resulting in a total gain of 32 per cent over the past two days.

Recent positive developments have fueled investor enthusiasm for the stock. On Wednesday, Rama Steel Tubes announced a strategic collaboration with Onix Renewable Ltd. to support green and renewable energy projects. This partnership will leverage Rama Steel Tubes' expertise to provide essential steel structures, including single-axis trackers and future dual-axis trackers, for solar projects undertaken by Onix Renewable Ltd.

The company highlighted its expansion into the green energy sector, developing specialized steel structures and tracker tubes crucial for solar greenfield projects.

“The prospects of this strategic collaboration with Onix Renewable Ltd. are to deliver top-quality solar energy solutions. Together, we will pave the way for a brighter, more sustainable future,” said the company.

Rama Steel forays into the defence sector

On Tuesday, the company announced the formation of a wholly-owned subsidiary of Rama Defence Private Limited. This new entity will focus on the defence sector, engaging in trading, importing, exporting, manufacturing, assembling, and supplying defence equipment, arms, ammunition, explosives, and related military and security hardware.

Long-standing experience in steel pipe manufacturing

Established in 1974, RSTL is a leading manufacturer of steel pipes, tubes, and G.I. pipes in India. The company has successfully expanded its operations globally, with a presence in over 16 countries. Exports constitute 10-20 per cent of its total business.

According to the company's website, RSTL operates a subsidiary in the UAE and a step-down subsidiary in Nigeria, further strengthening its global market presence.

The company’s latest annual report shows its production capacity of 294,000 metric tonnes in FY23, which allows it to efficiently meet diverse market demands. The company aims to increase its installed capacity to 394,000 metric tonnes by FY25.

In July 2023, the company signed a strategic MoU with JSW Steel and JSW Steel Coated Products Limited, which included procuring hot-rolled coils (HRC) for its steel products and becoming an official distributor for JSW Steel in the western region. The deal involved RSTL buying 100,000 tonnes of HRC and producing 200,000 tonnes annually of pre-galvanized pipes under the "JSW Kalinga" brand for the Western market.

Looking ahead, the steel industry has significant growth potential as the country aims to achieve 300 MT production capacity by 2030. The government has allocated USD 1.4 trillion for the National Infrastructure Pipeline (NIP) between FY19 and FY25, accelerating the steel sector's growth.

Financial performance

The company's total consolidated revenue from operations for the June ending quarter (Q1FY25) was ₹216.64 crore, down from ₹312.50 crore in the same period last year. Net profit for the period was ₹6.20 crore, compared to ₹7.46 crore previously.

For FY24, the company reported revenue exceeding ₹1,000 crore, reaching ₹1,047 crore, and a net profit of ₹30 crore, up from ₹27 crore in FY23.

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