Over the past five years, Rathi Steel & Power has recorded a sales growth rate of 9.28% and an EBIT growth rate of 18.30%, indicating a steady expansion in its core operations. The company’s average Return on Capital Employed (ROCE) stands at 14.07%, reflecting the efficiency with which capital is utilised to generate earnings. Meanwhile, the average Return on Equity (ROE) is noted at 3.39%, suggesting the returns generated for shareholders relative to equity invested.
Debt metrics reveal a conservative financial structure, with the company maintaining a negative net debt position and an average net debt to equity ratio of 0.26. This indicates that Rathi Steel & Power holds more cash or liquid assets than debt, which can be a favourable factor in managing financial risk. The average EBIT to interest coverage ratio is 0.65, providing insight into the company’s ability to meet interest obligations from operating earnings.
Built for the long haul! Consecutive quarters of strong growth landed this Small Cap from Chemicals on our Reliable Performers list. Sustainable gains are clearly ahead!
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Operational efficiency is further illustrated by the average sales to capital employed ratio of 5.79, which measures how effectively the company utilises its capital base to generate sales. The tax ratio is recorded at 0.00%, which may reflect specific tax treatments or exemptions applicable to the company. Institutional holding is at 11.09%, indicating a moderate level of investment from institutional investors.
From a market perspective, Rathi Steel & Power’s stock price closed at ₹27.97, showing a day change of 0.79%. The stock’s 52-week high and low are ₹51.95 and ₹21.65 respectively, demonstrating a wide trading range over the past year. When compared to the Sensex, the stock’s returns present a mixed picture: a one-month return of 12.74% contrasts with a year-to-date return of -32.19%, while the Sensex recorded 0.86% and 8.36% respectively over the same periods. Over a decade, the stock has delivered a cumulative return of 703.74%, significantly outpacing the Sensex’s 232.28% return, highlighting long-term value creation despite recent volatility.
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Within its industry peer group, Rathi Steel & Power’s quality evaluation now aligns with several other companies rated as average, such as Hariom Pipe, Steel Exchange, and Scoda Tubes. This adjustment in evaluation reflects a reassessment of the company’s fundamentals relative to its sector, taking into account factors like debt management, profitability consistency, and operational metrics.
Investors analysing Rathi Steel & Power should consider the company’s financial structure, operational efficiency, and market performance in the context of the broader Iron & Steel Products sector. While the company’s average ROCE suggests a reasonable utilisation of capital, the relatively modest ROE points to a cautious interpretation of shareholder returns. The negative net debt position offers a buffer against financial stress, but the EBIT to interest coverage ratio indicates that interest obligations require close monitoring.
Overall, the revision in Rathi Steel & Power’s quality parameter evaluation signals an adjustment in the assessment of its business fundamentals. This nuanced change provides investors with a clearer understanding of the company’s financial health and operational standing, aiding in more informed decision-making within the dynamic iron and steel market environment.
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