JTL Industries shares rise over 2% on acquisition of majority stake in Nabha Steels
Upstox
2 min read • Updated: April 9, 2024, 6:29 PM
Summary
JTL Industries’ acquisition of 67% stake in Nabha Steels and Metals will bolster the company’s total backward integration capacity. After the acquisition, the company’s capacity will now expand to 2.5 lakh tonnes of coils and 1 lakh tonnes of long products from existing 1.5 lakh tonnes of coils.
JTL Industries Ltd shares gained more than 2% on Tuesday, April 9, after the company announced acquisition of a 67% stake in Punjab-based Nabha Steels and Metals Ltd.
JTL Industries’ acquisition of the controlling stake in Nabha Steels and Metals grants the company ownership of the steel manufacturing facility. The acquired plant boasts a production capacity of 2 lakh tonnes and specialises in the manufacturing of steel products including coils and long steel items such as billets.
With this acquisition, JTL’s overall backward integration capacity will increase from 1.5 lakh tonnes of coils, which were earlier sourced solely from the Raipur plant, to 2.5 lakh tonnes of coils and 1 lakh tonnes of long products. In addition, the company’s backward integrated operations will now extend across Chhattisgarh and Punjab, the company said in a stock exchange filing.
“By integrating this new facility into our operations, we have significantly strengthened our backward integration capabilities, doubling our capacity from 150,000 tonnes of coils to 250,000 tonnes of coils and 100,000 tonnes of long products across Raipur and Punjab,” the company management said in a release dated April 9.
After the announcement, shares of JTL Industries gained as much as 2.8% to hit a high of ₹223.55 apiece on the NSE. However, the stock pared early gains and closed at ₹222.50 apiece, up 2.7% on NSE.
In a press release, JTL Industries said that this integration not only improves the company’s operational efficiency but also strengthens its supply chain resilience. This move ensures greater control over raw materials and improves cost management efforts, ultimately leading to improved margins for the company.
Nabha Steels and Metals’ revenue has grown from ₹113 crore in FY23 to ₹225 crore in FY24.
“This expanded integration not only enhances our operational efficiency but also fortifies our supply chain resilience, ensuring greater control of our raw materials and subsequent cost management efforts, which would, in turn, yield better margins while upholding our steadfast dedication to quality,” the JTL Industries management said.