Rama Steel Tubes (NSE: RAMASTEEL) (BSE: 539309) announces issue of bonus shares to its shareholders before 18 March, after which the stock has gained more than 12% in just four days. On Friday, March 7, the company closed above its previous resistance zone of 41, marking a new short term high.
Shares of Rama Steel were trading at a price of ₹26 per share in early 2023, after which the stock touched its all time high price of ₹50.50 gaining nearly 90% in one year. However, this bullish move did not sustain and the stock fell by 25% in the next two months.
10,000 invested in Rama Steel becomes 6 lakhs!
Penny stock Rama Steel gives multi bagger returns in less than five years. The amount of Rs. 10,000 investment in the company would have become Rs. 6,15,000, which is over 7000% gains!
The bonus issue announced might make the stock more attractive for investors. The stock has also closed above its volume-weighted average price for the last two days.
Rama Steel’s short term trend is also bullish as it is constantly taking support from super trend which is at ₹38. When any stock experiences a rising trend in its RSI, specifically when it rises from 50 to 70, its momentum increases. This is what RAMASTEEL is experiencing, with its RSI rising above 50, indicating increasing bullish momentum.
High EBITDA profit making Rama Steel Tubes attractive to investors
The company has experienced highest EBITDA annually in the last ten years. Last year itself, its EBITDA increased by 20%
Along with that, Rama Steel’s annual sales also touched a decade high at ₹1336.75 which the company reported on March 2023 (Source: Money Control)
Though the company’s Price to earnings ratio is on a higher side, its promoters are still bullish. This can be learned by studying their holding data from where we can check that the company’s promoters have increased stakes in the company marginally. Check the shareholder’s data in the table below
Shareholders details
| Category | Q4 2023 | Q3 2023 | Change % |
|---|---|---|---|
| Promoter | 57.2% | 57.1% | +0.1% |
| FII | 0.3% | 0.3% | 0.0% |
| DII | 0.6% | 0.7% | -0.1% |
| Public | 41.8% | 41.8% | 0.0% |
| Others | 0.0% | 0.0% | 0.0% |
CitaDel security Bought 31 Lakh shares in January
Investment consultant firm Citadel Security & Management Services, which is based in Delhi bought 31,69,883 lakh shares of Rama Steel at the price of ₹39.43.
Below is a list of top five share holders and their stakes in Rama Steel
| Name | Ownership Percentage |
|---|---|
| Naresh Bansal | 30.1% |
| Richi Bansal | 7.69% |
| Nikhil Bansal | 6.65% |
| Tarun Dhir | 6.22% |
| Aviator Global Investment Fund | 3.68% |
Sales Growth
| Timeframe | Sales Growth | Annualized Growth Rate |
|---|---|---|
| 1 YEAR | 95.21% | 95.21% |
| 3 YEAR | 51.27% | 14.87% |
| 5 YEAR | 24.74% | 4.49% |
Final Words
Rama Steel, which already have generated multibagger returns for its investors might still have potential in it. With the company experiencing highest demand in decades, it is sure to further grow in time to come.
If you want to be eligible for bonus issue of Rama Steel’s share you must have sales delivered to your account before the 18th of March.Earnings have grown by 31% in the previous year. It will be important to learn how the forecasted revenue turns out in the years to come for a significant further up move. This however is not a financial advice to buy or sell the stock.
