Shares of Godawari Power & Ispat have demonstrated a robust upward trajectory over the past 13 months, significantly enhancing investor wealth within a remarkably brief period. From a trading price of ₹359.60 apiece, the company's shares have surged by an impressive 200%, to trade at the current level of ₹1,090 per share.
During this period, the stock finished 10 months with gains. This consistent upward trajectory has translated into a remarkable 1918% increase over the past 5 years alone, with an impressive long-term gain of 4640% over the past 8 years.
During the last nine calendar years, the stock has closed in the red only three times, achieving multibagger returns in four of those years. Notably, it delivered exceptional annual returns of 484% in CY17 and impressive performances of 105%, 134%, and 103% in CY20, CY21, and CY23, respectively.
The company is a prominent player in India's steel sector. As a subsidiary of Hira Group, it has evolved into a fully integrated steel manufacturer with a diverse portfolio encompassing iron ore mining, pellet production, sponge iron, steel billets, ferroalloys, and power generation.
GPIL's strategic approach and robust infrastructure have solidified its position as a formidable player in the industry. It is ramping up its mining output at the Ari Dongri mines, which are slated to become the primary raw material source for its pelletization and HRC plants in the future. According to YES Securities, a domestic brokerage firm, these mining activities will bolster GPIL's quest to emerge as one of the country's most efficient steel producers.
Currently, GPIL is expanding its pellet plants' capacity from 2.70 million tonnes per year (mtpa) to 4.70 mtpa. The company has opted for high-grade pellets over iron ore lumps and blended coal in its sponge iron manufacturing process.
According to the brokerage, these premium-quality pellets command a price premium of approximately ₹1,000 to ₹1,500 per tonne over standard-grade pellets. The new pellet plant's capacity, set to be commissioned in early FY26, is expected to add about 1.0 million tonnes of incremental volumes from FY24 onwards, significantly impacting the company's financial outlook.
Expanding its mining and pelletisation capabilities, the brokerage highlighted that the company is strategically positioned towards integrated steel production. Its next milestone is the development of a 2.0 mtpa integrated HRC (hot-rolled coils) plant, scheduled for completion between September 2027 and March 2028.
By establishing this plant, GPIL aims to maximise its backward integration capabilities and consolidate its position as one of the nation's most cost-efficient steel producers.
Over the last decade, the company has undergone massive debt restructuring. Post Covid, the company focused on making progressive debt repayments to focus on developing a healthy balance sheet. The company’s debt levels peaked in FY2017, thereby denting the capex plans for the company. However, by the end of FY2022, GPIL had become net-debt-free on a consolidated basis.
Looking ahead, the brokerage anticipates that GPIL's debt-free balance sheet will facilitate investment in new capital projects using internal funds. Reduced interest expenses are expected to bolster cash flows, supporting future capital expenditure initiatives.
Currently, GPIL is embarking on a significant venture—a ₹60,000 million greenfield integrated HRC plant with a capacity of 2.0 mtpa. The company plans to finance a substantial portion of this investment through internal cash accruals and existing net-worth capital.
Encouraged by these growth prospects, the brokerage has initiated coverage on GPIL with a target price of ₹1,390 per share, representing a record high and signalling a potential upside of 27.52% from the previous closing price of ₹1,090 per share.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
