Steel Exchange India Shares Surge 8% After Stock Pledge Update – Should You Invest?
Steel Exchange India, a small-cap stock priced below ₹10, saw an impressive 8% surge in intraday trading on Monday, March 3. This rally was triggered by a stock pledge update from its promoter, Vizag Profiles Private Limited. The stock, which has been under pressure in recent months, gained investor interest following this latest development.
Stock Pledge Update – What Happened?
According to an exchange filing dated March 1, Steel Exchange India’s promoter released a pledge on 50 lakh shares, representing 0.42% of the company’s total share capital, on February 27. This release came after the promoter made a partial repayment of the principal loan taken from Capri Global Capital Limited.
However, the released shares were subsequently re-pledged in favor of Mukund Security and Investment as security against another loan. This move suggests that while some debt has been repaid, financial commitments remain high for the promoter group.
Promoter Holding & Pledge Status
As of the December 2024 quarter, Steel Exchange India’s promoters held a 52.90% stake in the company. However, an alarming 98.76% of this holding was pledged, indicating significant financial leverage by the promoters.
Impact on Share Price & Recent Performance
Following the stock pledge update, Steel Exchange India’s share price jumped 8.03%, hitting the day’s high of ₹8.47. The stock opened at ₹7.87, slightly above its previous close of ₹7.84.
Despite this gain, the stock is still trading close to its 52-week low of ₹7.80, significantly lower than its 52-week high of ₹15.85. This underperformance highlights the stock’s volatility and the challenges it has faced in recent months.
Stock Performance Overview:
- 1-Year Return: -45%
- 6-Month Return: -40%
- 3-Month Return: -24%
- 1-Month Return: -17%
Clearly, Steel Exchange India has been under selling pressure for a while. While the recent rally offers some relief, it remains to be seen whether this trend will sustain.
Q3 Results – A Turnaround in Progress?
Steel Exchange India’s Q3 FY24 financial results provided a silver lining. The company posted a massive jump in profit, reporting ₹15.86 crore, compared to just ₹21 lakh in the same period last year.
Its revenue from operations also showed strong growth, increasing by 28% year-on-year (YoY) to reach ₹327.78 crore. This suggests that the company is improving its operational performance despite stock market struggles.
Financial Ratios & Key Metrics
Here’s a look at some of the key financial ratios and metrics:
| Metric | Value |
|---|---|
| Current Market Price (CMP) | ₹8.47 |
| 52-Week High | ₹15.85 |
| 52-Week Low | ₹7.80 |
| Market Cap | ~₹900 crore |
| Promoter Holding | 52.90% |
| Promoter Pledge | 98.76% |
| Revenue (Q3 FY24) | ₹327.78 crore |
| Net Profit (Q3 FY24) | ₹15.86 crore |
| 1-Year Return | -45% |
Should You Invest in Steel Exchange India?
Steel Exchange India presents a high-risk, high-reward opportunity. The company has shown strong earnings growth, but the high promoter pledge raises concerns about financial stability.
Pros:
✅ Strong Q3 earnings growth
✅ Stock is near its 52-week low, offering potential for recovery
✅ Growing revenue indicates operational improvement
Cons:
❌ Extremely high promoter pledge (98.76%)
❌ Stock has fallen 45% in a year, indicating weak market confidence
❌ High volatility and financial leverage risks
Final Verdict
Steel Exchange India is a stock that might attract short-term traders looking for a quick bounce. However, for long-term investors, the high promoter pledge remains a red flag. Until the company reduces its debt burden, the stock may remain under pressure.
If you’re considering investing, it’s crucial to monitor future pledge updates, financial performance, and overall market trends before making a decision.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.