Surya Roshni: Double Rewards for Investors
Surya Roshni Ltd., a small-cap company in the iron and steel products sector, has announced two major rewards for its investors: a 1:1 bonus issue and a 50% interim dividend. Despite these announcements, the company’s Q2 FY25 earnings showed a significant decline, which may keep its stock price in focus next week.
1:1 Bonus Issue
- Details: One bonus share will be issued for every existing share held.
- Capitalization: ₹54.41 crore will be capitalized from reserves such as the Securities Premium Account, General Reserve, Capital Redemption Reserve, or Retained Earnings.
- Approval: Subject to shareholder approval through a postal ballot.
- Timeline: The process will be completed by January 13, 2025.
50% Interim Dividend
- Amount: ₹2.50 per share (50% of the face value of ₹5).
- Record Date: November 29, 2024.
- Payout Deadline: December 13, 2024.
Q2 FY25 Financial Performance
The company’s Q2 results reflected challenges in its core segments:
- Revenue: ₹1,529 crore, a 20% decline year-on-year (YoY).
- Profit After Tax (PAT): ₹34 crore, down by 55% YoY.
- EBITDA: ₹83 crore, lower by 40% YoY.
- Key Challenges:
- Steel Pipes business faced weak demand and declining hot-rolled steel prices.
- Lighting & Consumer Durables segment struggled with price erosion in LED products.
Despite these setbacks, the company mitigated losses through operational efficiencies and better cost management.
Outlook for FY25
Managing Director Raju Bista expressed optimism for the upcoming quarters, citing expectations of:
- 12% revenue growth for FY25.
- Improved EBITDA margins.
- Growth in the Professional Lighting and Consumer Appliances segments during the festive season.
- Expansion efforts in semi-urban markets to strengthen the company’s position against price pressures.
Stock Performance and Valuation
- Latest Price (Nov 14): ₹611.75 (down 6.5% on the BSE).
- Market Cap: ₹6,656.94 crore.
- P/E Ratio: 20.65x.
- ROE: 14.90%.
Analysts’ Recommendations
- Consensus Rating: BUY.
- 1-Year Target Price: ₹661 (potential upside of 7%).
- EPS Growth Estimate: 30% in FY25.
Business Overview
Founded in 1973, Surya Roshni began with manufacturing steel tubes and has since diversified into:
- Lighting (1984): Includes LED products.
- PVC Pipes (2010).
- Consumer Durables (2014-15): Focused on fans and home appliances.
The company’s brands, Surya and Prakash Surya, are well-established, with a strong pan-India presence supported by an extensive dealer network.
Investor Takeaway:
Surya Roshni’s double rewards signal a commitment to shareholder value, even amid near-term earnings challenges. Its long-term growth initiatives in consumer durables and lighting, along with its bonus and dividend payouts, make it a stock to watch. However, the immediate reaction to its Q2 results may influence short-term performance.
Disclaimer: This information is for educational purposes only and should not be considered financial or investment advice. Please consult a financial advisor before making any investment decisions.
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