Sarda Energy and Minerals, a flagship company of the Sarga Group, experienced a remarkable surge of 14% in its stock price on March 22, Friday, reaching Rs 223.5 per share during intraday trading on the Bombay Stock Exchange (BSE). This surge was triggered by the company’s announcement that its subsidiary joint venture had received a Letter of Intent for a Composite License from the Maharashtra state government.
Letter of Intent for Surjagad 1 Iron Ore Block
The subsidiary, Natural Resources Energy Pvt. Ltd. (NREPL), has been granted the Letter of Intent for the Surjagad 1 Iron Ore Block in Maharashtra. Covering an area of 1,526 hectares, this license allows the subsidiary to explore and extract iron ore resources. Sarda Energy and Minerals holds a 51% economic interest in this joint venture, as revealed in an official filing.
Impressive Rise in Share Price
At 10:55 AM on the same day, Sarda Energy and Minerals witnessed a stock price rise of 13%. This outperformed the benchmark S&P BSE Sensex which only rose by 0.19%. This surge indicates the positive market sentiment surrounding the company’s prospects following the announcement.
Operations and Business Profile
Sarda Energy and Minerals is renowned for its vertically integrated steel production and its ownership of captive iron ore resources. The company also manufactures and exports specialized manganese-based ferroalloys and benefits from self-sufficient captive power generation through waste heat and coal.
Financial Performance
In its recent financial update for the October-December quarter, Sarda Energy reported a consolidated net profit of Rs 11.716 billion. While this represents a decline from the previous fiscal year’s Q3 (Rs 1.3036 billion) and Q2FY24 (Rs 1.4065 billion), it demonstrates the company’s ability to maintain a solid financial foothold. The revenue from operations stood at Rs 9.254 billion. Although a slight increase from the previous year’s Rs 9.08 billion, it shows a decrease compared to the preceding quarter’s Rs 10.0036 billion.
Segment-wise Performance
The steel segment experienced the most significant decline in revenue, dropping from Rs 5.65 billion year-on-year to Rs 5.10 billion. Meanwhile, the Power segment’s revenue decreased from Rs 2.287 billion to Rs 2.12 billion, and revenue from ferroalloys saw an increase, rising from Rs 2.916 billion to Rs 3.63 billion year-on-year.
Volatility in System Share Price
Over the past month, shares of Sarda Energy witnessed approximately a 12% decline, while the benchmark Sensex index saw only a 0.07% dip. However, it’s important to note that the stock achieved a 52-week high of Rs 264.95 on December 15, 2023, and a low of Rs 96.7 on March 28, 2023. This highlights the inherent volatility of the stock market and the need for investors to carefully assess long-term potential rather than solely focusing on short-term fluctuations.
Expanding Renewable Energy Footprint
In January, Sarda Energy awarded a contract worth Rs 150 crore to Gensol Engineering Ltd for the installation of a 50MW DC solar power plant in Chhattisgarh. The contract includes various activities, such as design engineering, procurement, construction, and commissioning of the solar power plant. The company expects the project to be completed within 6-9 months from the signing of the Letter of Intent. Including this renewable energy initiative, Sarda Energy and Minerals continues to demonstrate its commitment to diversified and sustainable growth in various sectors. The recent surge in share price, supported by the Maharashtra government’s Letter of Intent, further highlights the positive sentiment surrounding the company and its future prospects.
