1:1 Bonus: Tata Steel's Penny Stock With ROE of 122%, Hits Back To Back Lower Circuits, Falls By 10% In 6-Days

Industrial equipment handling and allied services provider, TRF is backed by Tata Group-led steel giant Tata Steel. While TRF is among the top 2024 winner with triple-digit gains for investors, this penny stock has started to consolidation. TRF has been hitting back to back 2% lower circuits for five consecutive days, and has been in red since it announced financial results for Q4FY24.

Lower circuits mean that there are several sellers but no buyers in a stock. That being said, TRF has witnessed only sellers since May 16th. TRF hit yet another 2% lower circuit on May 22nd.

On Wednesday, the stock froze at Rs 566.90 apiece, at 2% lower circuit with a market cap of Rs 623.88 crore.

Taking back to back massive beating from bears from May 15th to 22nd, TRF shares have nosedived by a massive 9.6% on BSE. The stock was last seen in green on May 14 with its price level at Rs 627.30.

TRF shares entered into the red zone after its Q4 earnings report where its profitability tumbled sharply.

In Q4FY24, the company reported a consolidated net profit of Rs 6.29 crore, down from Rs 13.28 crore in Q4FY23 and Rs 8.80 crore in Q3FY24. Its revenue on a consolidated basis shot up to Rs 38 crore in Q4FY24, as against Rs 28.77 crore in Q3FY24, but was down marginally from Rs 38.89 crore in Q4FY23.

That being said, TRF exited FY24 with a net loss of Rs 4.98 crore, as against a profit of Rs 1.05 crore in FY23. Meanwhile, its revenue for FY24 plunged to Rs 139.95 crore as against Rs 177.10 crore in FY23.

Nonetheless, TRF continues to give robust gains in 2024, emerging as one of the best performing stocks. YTD, TRF shares by Rs 314.05 or 124.20% on BSE. The stock was merely at Rs 252.85 apiece in the start of January 2024. Meanwhile, in a year, the stock rallied by 251%. A year ago, on May 22, the stock was just at Rs 161.65 apiece.

As per the Trendlyne data, among the key fundamentals, the key positives are that TRF shares have outperformed its sector by 110.75% in the past year, while its Price to Earning Ratio is 18.25, which is lower than its sector PE ratio of 70.45. Also, its Return on Equity(ROE) for the last financial year was 88.58%, more than 20% in the last financial year, indicating an efficient use of shareholder's capital to generate profit.

Additionally, the stock's Interest Coverage Ratio is 4.17, higher than 1.5, which means that it is able to meet its interest payments comfortably with its earnings (EBIT). Also, Promoter Pledges are zero.

Meanwhile, mutual funds have refrained from investing in TRF shares, same as last quarter with shareholding at 0%. Further, promoter pledges are zero.

Among the key drawbacks is that Debt to Equity Ratio of 3.05 is higher than 1, which implies that company assets are financed through debt. Also, Annual Revenue fell 28.37%, in the last year to ₹162.05 Cr. Its sector's average revenue growth for the last fiscal year was 14%. Further, Annual Net Profit fell 60.93% in the last year to ₹34.6 Cr. Its sector's average net profit growth for the last fiscal year was 17.88%.

Further, as per BSE, as of May 22, 2024, the stock has PE ratio of 13.39x and RoE of 122.08. But the stock has not declared any dividend since 2012, or distributed bonus shares since 2009.

TRF last declared dividend of Rs 4 per share in July 2012, while it last delivered bonus shares of 1:1 in July 2009. TRF has not carried any stock split.

TRF Limited, a Group Company of India's most respected business house - TATA, is a leader in the field of Engineered-to-Order, bulk material handling equipment, systems and allied services.

Incorporated in 1962 as Tata-Robins-Fraser Ltd. and re-christened as TRF Limited in 1994, the company is the most comprehensive provider of equipment and services to the infrastructure sectors of the economy such as Steel, Mining, Power and Ports, amongst others, using leading-edge technologies with customer-friendly service and credible performance.

The Company, with its long and extensive track record, manufactures the most comprehensive range of equipment and undertakes the execution of large projects on a turn-key basis related to Material Handling, Sizing and Mineral Processing. It also provides engineering and technology for Mini Blast Furnaces, Coal Dust Injection Systems for Blast Furnaces and Stamp Charging and Pushing Equipment for Coke Ovens. Armed with innovative initiatives and a customer-sensitive approach, the Company is forging ahead towards new horizons and enlarged footprints across India.