800% Rally In 5 Yrs: Small Cap Stock In Spotlight After Equity Conversion With Increase in Promoter's Stake

Rathi Steel and Power Ltd.'s shares increased by 3.8 percent on Tuesday and now closed at 36.25 Indian Rupees after previously closing down at 34.93 Indian Rupees a share. The stock's 52-week range is 24.50 per share and 97.81 per share.

In a meeting conducted on 24 March 2025, the Board of Directors of Rathi Steel and Power Ltd. agreed to issue 1,300,001 equity shares of 10 rupees each. This issuance was an outcome of the conversion of 15,05,265 1 percent OCRPS issued on 22 February 2024 at a conversion price of 55 rupees per share. A promoter group company, PCR Holdings Private Limited (formerly Archit Securities Private Limited) was allocated these shares via a preferential allotment through private placement. The company's paid-up equity share capital after this conversion reaches 86.36 crores (USD 10.43 million) and is divided into 863,630,004 shares of 10 rupees each.

Besides the equity conversion, PCR Holdings Pvt Ltd has exercised further consolidation of its interest in the company by other open market dealings. The promoter purchased 45,000 shares, increasing his holding by 0.21%, on March 21, 2025, and 25,000 shares, increasing his holding by 0.12%, on March 20, 2025.

From a financial perspective, Rathi Steel's performance for Q3 FY25 as a mixed bag. The company achieved net sales of ₹104.43 crores which is a 3.2% growth, whilst the net profit dipped by 32% to ₹0.79 crores in relative Q3 FY24. Nonetheless, for the period of 9 months in 9MFY25, the company witnessed a decline in net sales by 6% at ₹353.59 crores while net profit rose substantially by 199% at ₹10.16 crores in comparison to 9MFY24.
As of December 2024, the holding structure of the company's stock stands at 48.22% by the public, 40.32% by the promoters, 8.94% by Foreign Institutional Investors (FIIs), and 2.53% by Domestic Institutional Investors (DIIs). Over the last five years, the stock has provided multibagger returns exceeding 1,500%.

A giant in the steel business, Rathi Steel and Power Limited, was founded in 1971 and focuses on producing and distributing steel as well as stainless steel products. Their wire rods and flats are essential to infrastructure, engineering, and even household activities. In Ghaziabad, Uttar Pradesh, Rathi runs a plant which has a yearly rolling capacity of two hundred thousand tons, along with a steel melting shop that produces stainless steel billets and has a capacity exceeding ninety thousand tons per year.

The conversion of equity to strategic investment and the higher promoter shareholding suggests increasing confidence in Rathi Steel's growth prospects, further strengthening the company's position within the steel sector.