Rudra Global Infra Products - How real are Q4 Profits?

Rudra Global Infra Products (changed its name from M D Inducto Cast Ltd)  is engaged in various businesses like Ship recycling, oxygen plant, Induction Furnace, Re-rolling mill, producing more than 2 Lakh MT per annum of steel. This is what is stated by the company on its site about its business. In simple term, it is a Rolling Mill in Bhavnagar, using Ship breaking material, as its raw material, sourced from Alang, largest ship breaking yard in Asia, located near Bhavnagar. All other business stated are ancillary to a rolling mill, while such business give a simple conversion margin, on company largely making TMT Bars. Company also states that TMT Bars are made from 100% Billet, which further narrows conversion margin. All rolling mills located in Gujarat and Mandi Gobindgarh in Punjab are struggling to survive.

This company posted  rosy consolidated Q4 FY 21 numbers, with an  income of Rs. 81 cr, strangely with negative other business income of Rs. 1.46 cr, as also, negative Purchase of Stock in Trade of Rs. 10.78 cr. Q4 PBT was at Rs.9.46 cr, with PAT at Rs.9.90 cr, with PAT being higher than PBT. You cannot extrapolate these Q4 numbers, as FY 21 PBT was loss at Rs. 30.44 cr and net loss of Rs. 30.50 crore.

Balance Sheet as at 31-3-21 gives more horrible picture. Inventories (Rs.172 cr) and Receivables of Rs. 71 cr, aggregating to Rs. 243 cr is more than 12 month sales of Rs. 240 cr ,of FY21. Fixed Assets are just at Rs. 60 cr. Net Worth as at 31-3-21 is at Rs. 70 cr, with borrowings of Rs. 169 cr, and Creditors of Rs. 66 cr.

However, share was hitting UC for last 9 days, with LC seen yesterday, with share now ruling at Rs. 37. Only 474 Retail investors are holding 4.08 lakh shares, being 1.63%, which is easily making stock to hit UC. But, someone is giving a buy call on the stock and few investors seen buying it, are doing an injustice with their clients and hard earned money, as share has to eventually rule in single digit, once frenzy dies down.

There are many such micro cap stocks, on which retail frenzy is seen, but need a Big caution, on buyng.

This is not a buy or sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.