Stock of this iron & steel products company zoomed 50% in one month

The stock price of Usha Martin surged 8% to Rs 198.75 on the BSE in the intra-day trade on Wednesday after 5.64 million equity shares had changed hands till 2:00 PM

Shares of Usha Martin moved higher by 8 per cent to Rs 198.75 on the BSE in Wednesday’s intra-day trade amid heavy volumes. In the past one month, the stock of the iron & steel products company has zoomed 50 per cent, as compared to 0.41 per cent decline in the S&P BSE Sensex. It had hit a record high of Rs 198.95 on January 2, 2023.

Last month, Usha Martin was the top monthly gainer among the S&P BSE Smallcap index constituents as it gained 50 per cent. By comparison, the SmallCap index was down 2.5 per cent during the period. Moreover, in the past one year, the market price of the company has more-than-doubled, zooming 115 per cent, as against a marginal 0.39 per cent rise in the Sensex.

At 02:06 PM, Usha Martin was quoting 5 per cent higher at Rs 191.70 on the back of two-fold jump in trading volumes. A combined 5.64 million equity shares, representing 2 per cent of total equity of the company, had changed hands on the NSE and BSE till the time of writing of this report.

Last month, Exchanges had sought clarification from the company regarding the sharp up move. To this, the company said that according to their understanding, at present, "there is no material relevant information and/ or announcement which could have a bearing on the operations and the performance of the company or on the price movement of the company’s traded scrip".

Usha Martin is a leading global manufacturer of steel wire ropes and is also engaged in the manufacturing of wires, LRPC strands, prestressing machines & accessories and optical fiber cables. Usha Martin’s wire rope manufacturing facilities in Ranchi, Hoshiarpur, Dubai, Bangkok, and UK produce the widest range of wire ropes that find application in various industries across the world.

For the first half (April-September) of current financial year 2022-23 (H1FY23), Usha Martin reported 39.3 per cent year on year (YoY) jump in consolidated net profit at Rs 161.20 crore. Revenue of the company during the period grew 30.6 per cent YoY at Rs 1,579 crore. Higher realizations and better volumes assisted revenue growth during the period. Earnings before interest, taxes, depreciation, and amortization (ebitda) margin, however, contracted 76 bps to 15.5 per cent from 16.3 per cent in H1FY22.

The company, post divestment of its Steel Business Undertaking, has improved with renewed vigor with its focus on capability building, debottlenecking of constraints and increase in productivity of key products to remain agile and competitive.

In order to continue to be sustainable, resilient and future ready, the company is preparing plans for augmenting capacity and capability building. There is focused effort for planned capability building by adding new machines for producing high end ropes and value-added products. Further, the plans for addition of capacity would focus mainly upon debottlenecking constraint areas and increase productivity of key products.

"With these plans in hand, the company remains confident of making deeper inroads into international markets with high contributory products. It is also expected that with steady infrastructure spending by the Indian government, specialty products used in construction and infrastructural sector may become one of the key growth drivers for the company," Usha Martin said in its FY22 annual report.