Surya Roshni, a small-cap manufacturer of iron & steel products, has announced a “double dhamaka” for its investors, offering both a 50% interim dividend and a 1:1 bonus issue. These actions are aimed at rewarding shareholders, with the record date for eligibility set for November 29, 2024. The interim dividend of ₹2.50 per equity share will be paid on or before December 13, 2024. The bonus shares, approved by the company, will be issued by capitalizing the securities premium account, general reserves, or retained earnings, and are expected to be distributed by January 13, 2025.
However, despite these positive announcements, Surya Roshni’s financial performance for Q2 FY25 showed a significant downturn. The company posted a 55% year-on-year decline in profit after tax (PAT), which stood at ₹34 crore. Revenues fell by 20% to ₹1,529 crore, while EBITDA dropped 40% to ₹83 crore. The downturn was largely attributed to a sharp decline in HR steel prices, which impacted the Steel Pipes segment, as well as lower demand. Additionally, the Lighting & Consumer Durables segment faced continued price erosion in LED products, although better cost management and an improved product mix helped to mitigate some of the losses.
Looking ahead, the company remains optimistic about the upcoming quarters, particularly with expected demand increases due to the festive season. Surya Roshni’s management aims for a 12% revenue growth for FY25, with a cautiously optimistic outlook on EBITDA margins. The company also plans to expand its consumer durables segment and increase its presence in semi-urban markets to strengthen its market position and counter ongoing price pressures.
As of November 14, 2024, Surya Roshni’s stock ended at ₹611.75, a 6.5% decline from the previous day. The company has a market capitalization of ₹6,656.94 crore. The stock’s price-to-equity ratio stands at 20.65x, with a return on equity (ROE) of approximately 14.90%. Despite the recent earnings decline, analysts are generally positive about the stock, with a consensus “BUY” recommendation. The stock’s EPS is expected to grow by 30% in FY25, and the average 1-year target price for the stock is ₹661, suggesting a potential upside of around 7%. Surya Roshni, which has a long-established presence in the steel pipes and lighting industries, continues to maintain a strong pan-India network.
Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial advice. Readers should conduct their research or consult with a professional financial advisor before making any investment decisions. The author and publisher do not assume any responsibility for any financial outcomes based on this information.
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