Penny stock below ₹10: Shares of SRU Steels Limited, a penny stock trading below ₹10, hit their 5 percent upper circuit at ₹8.07 on Thursday, January 9, following the company’s announcement of a board meeting to discuss fundraising proposals. The meeting is scheduled for Monday, January 13, 2025, to evaluate and approve plans aimed at bolstering the company’s financial resources.
In its regulatory filing, the company stated that it plans to raise funds through various methods, including equity shares, convertible instruments, and other securities. These may be issued via preferential allotment, rights issue, Qualified Institutional Placements (QIPs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs), Foreign Currency Convertible Bonds (FCCBs), or a combination of these methods, in one or more tranches.
Rights Issue Details
As part of its fundraising initiative, SRU Steels Limited intends to issue 47,951,400 equity shares with a face value of ₹10 each, aiming to raise ₹47.95 crore. Shareholders will be entitled to four rights shares for every existing share held, reflecting a 4:1 entitlement ratio.
This move follows SRU Steels’ positive financial performance in Q1FY24, marked by a robust 489.76 percent year-on-year growth in operational revenue. Revenue surged from ₹1.55 crore in Q1FY23 to ₹9.16 crore in Q1FY24.
Mixed Financial Performance
Despite the impressive revenue growth, the company’s EBITDA experienced a marginal decline, dropping 8.87 percent from ₹0.12 crore in Q1FY23 to ₹0.11 crore in Q1FY24. However, the profit after tax (PAT) saw a notable increase of 103.03 percent, rising from ₹0.03 crore to ₹0.07 crore during the same period.
Earlier in May 2023, SRU Steels also issued bonus equity shares in a 1:2 ratio, granting one additional share for every two shares held by shareholders. This step further underscored the company’s commitment to enhancing shareholder value.
Business Overview
SRU Steels Limited, headquartered in New Delhi, operates in the trading of stainless steel products, including mild steel, carbon iron steel, steel coils, and sheets. Additionally, the company acts as a consignment agent. Incorporated in 1995 as SRU Knitters Limited, the company rebranded to SRU Steels Limited in April 2010.
Stock Price Trends
The penny stock remains 47 percent below its 52-week high of ₹15.20, reached in September 2024. However, it has advanced over 41 percent since its October 2024 lows.
On a yearly basis, SRU Steels has shed 32 percent of its value. In recent months, the stock gained 12 percent and 11 percent in December and November 2024, respectively, after enduring three consecutive months of declines since August. So far in January 2025, the stock has dipped 1 percent despite today’s surge.
SRU Steels’ recent fundraising plans and its consistent efforts to improve financial performance reflect its strategic initiatives to strengthen its market position. Investors will be closely watching the outcomes of the January 13 board meeting and the company’s execution of its plans.
