Gallantt Ispat gains 4% on Rs 55-cr wagons deal with East Coast Railway

This purchase is expected to save 25% of the freight costs incurred by the company.

Shares of steel maker Gallantt Ispat surged 4 percent on Monday after the company announced a Rs 55-crore deal with the East Coast Railway to purchase railway wagons for its operations.

In a corporate filing with the exchanges, the company announced that it had bought wagons worth Rs 55 crore to tide over the shortfall of railway wagons at its disposal. The railways will fulfill the order through its General-Purpose Investment Scheme by November 2023. As stated in the filing, the purchase is expected to ease the logistics of transferring iron ores from the point of origin to its steel-making facility and save 25 percent of the freight costs incurred by the company.

In reaction to the announcement, nearly 8 lakh shares changed hands at both exchanges against its monthly average of 2 lakh. The stock has a low P/E of 12.5x.

At 12.15pm, Gallantt Ispat was quoting at Rs 71.50, up Rs 2.60, or 3.77 percent, on the NSE.

After trading flat for a month at Rs 52.35 on May 2 to Rs 53.45 on June 1, the stock has gained 35.64 percent till date.

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In Q4FY23, the company reported a 33.74 percent rise in revenue, up from Rs 3017 crore in FY22 to Rs 4,035 crore in  FY23. It registered a decline in its operating profit margin from 10 percent in FY22 to 8 percent in FY23, while net profit for FY23 stood at Rs 240 crore as against Rs 237 crore in FY22.

Gallantt Ispat with its sole manufacturing facility situated in Gorakhpur, Uttar Pradesh specialises in production of sponge iron, mild steel billets and re-rolled products (TMT bars). To ensure seamless manufacturing, as stated on its website, the company has operationalised its own power plant for its energy needs and also boasts of a private railway siding for unloading crude ore.