Steel Stock Hits 5% Upper Circuit At Rs 8 Level On Fundraising Plan

A company based in India, SRU Steels Limited deals in mild steel, carbon iron steel, and stainless steel. Founded in 1995, SRU Steels has operations in Ahmedabad and Delhi. Steel coils, sheets, and various forms of steel are sold by SRU Steels. With a market valuation of Rs 48.37Cr, SRU Steels' shares were trading at a 5% upper circuit limit on Thursday at Rs 8.07 a share. This followed the announcement by the corporation that the Board of Directors will meet on Monday, January 13, 2025, to review and approve proposals for fundraising.

"In terms of Regulation 29 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we hereby notify that the meeting of the Board of Directors of the Company is scheduled to be held at the registered office of the Company i.e. 11/598/1, Chawla Market, Patpar Ganj Road, Jheel Khuranja, Delhi - 110031, on Monday, 13 January, 2025 to consider and approve inter alia the following business: 1. To augment the financial resources of the Company via funds raising by way of issue of equity shares/convertible instruments/other securities through preferential allotment, right issue, QIP's, ADR GDR, FCCB or any other method or combination thereof, in one or more trenches," said SRU Steels in a stock exchange filing.

Recently SRU Limited intends to issue 47951400 equity shares at a nominal value of Rs.10 each and expects to raise Rs. 47.95 crore from this provision. For all fully paid-up equity shares held on the date of entitlements, shareholders will, as a benefit, be allowed 4 rights shares for every existing equity share - entitlements are in the ratio of 4:1.

This rights issue however follows the back from the success in Q1FY24 of SRU Limited's financial performance and other operational parameters. It is worth mentioning that the Operations Revenue grew 489.76% higher than operations earned in Rs 1.55 crore in Q1FY23 to Rs 9.16 crore in Q1FY24.

Yet, EBITDA experienced a marginal decline which fell by 8.87% from Rs 0.12 crore across Q1FY23 to Rs 0.11 crore across Q1FY24. Although SRU Limited had posted a decline in EBITDA, the profit after tax (PAT) of the company had however shown a considerable increase of 103.03% moving from a net profit of Rs 0.03 crore in Q1FY23 to Rs 0.07 crore in Q1FY24.

On the other hand, the results SRU Limited achieved in FY23 also serve to demonstrate the positive dynamics of the company. Net sales comprised this increase of 11.36% and reached Rs 16.72 crore, whereas the net profit rose nearly two hundred per cent by 201.73% and reached Rs. 0.70 crore when compared with the previous financial year. These results speak volumes of the growing presence and strength of the company in the steel industry.

In the same month, SRU Limited also declared a bonus equity issue of 1:2. That is for every 2 shares held by a shareholder, the Company will issue an additional share. The ex-bonus date of this issuance was May 3, 2023 which indicates further the level of the company in enhancing the wealth of its shareholders.

Incorporated on 11th September 1995 and headquartered proceedings with a registered head office in the Mumbai region SRU Limited has attained a reputable position in the steel trading wholesale market. The company supplies mainly stainless steel, carbon steel, and mild steel for infrastructure and housing projects throughout India.

Due to its reputation for quality and dependability, SRU Limited is still considered a reliable partner for different areas, assisting in the development of infrastructural as well as manufacturing sectors of India.

In this way, part of SRU Limited's strategy to enhance its growth prospects and create value for its shareholders is the combination of a rights issue, solid performance, and a series of strategies put in place.