Top Performing Steel Stocks of FY24

The Indian metal sector, particularly steel, is flexing its might! Despite global economic jitters and supply chain snarls, it has emerged as a champion.

The Nifty Metal index has witnessed a phenomenal 51% surge in just a year, growing from 5,460 in March 2023 to a commanding 8,257 by March 2024. This resilience is a testament to the sector's underlying strength.

But what is fuelling this fiery performance? A potent combination of factors is driving the heat. Domestic demand remains robust, infrastructure projects are booming, and supportive government policies are creating a favourable environment.

As a result, top steel stocks have emerged as the clear winners of 2024 so far, outperforming broader indices like the Sensex and Nifty.

But the story does not end there. India's position as the world's fastest-growing large economy adds another layer of conspiracy.

Curious to discover the frontrunners in this exciting space? This article dives into the top-performing steel stocks of FY24 so far.

#1 Garg Furnace

First on the list is Garg Furnace.

The company manufactures and deals in Iron and Steel products such as MS Round Ingot Wire Rod etc.

It is engaged in the manufacturing and trading of alloy and non-alloy steel ingots, wire rods, wire rounds, mig wire, and the casting of iron products.

Over the past year, Garg Furnace has demonstrated exceptional growth, with its stock price surging from approximately Rs 42 per share to Rs 335 per share, marking an impressive gain of 691%.

This remarkable performance can be primarily attributed to robust earnings reported for the nine months ending December 2023.

During this period, the company's revenue climbed from Rs 1,759 million (m) to Rs 1,870 m, reflecting a solid 6% growth. Moreover, Garg Furnace achieved a notable 30% increase in net profit year-on-year, reaching Rs 27.2 m. This surge in profitability was fueled by a reduction in administrative expenses, bolstering operating income and subsequently boosting net profit.

Further bolstering investor confidence, Securocrop Securities acquired a 3.9% stake in the company, indicating positive market sentiment towards Garg Furnace. Additionally, the company boasts a low debt-to-equity ratio of 0.2, showcasing sound financial management.

Looking ahead, Garg Furnace is poised for further expansion, both domestically and in new locations, with a strategic focus on revenue growth.

For more details, see the Garg Furnace company fact sheet and quarterly results.

#2 Sharda Ispat

Second on the list is Sharda Ispat.

Sharda Ispat is engaged in the iron and steel business. It manufactures alloy, carbon, and spring steel rolled products for the various automobile OEM component manufacturers, forging and bright bar industries.

Its product offerings comprise Flats, Round Bars, and Square Bars. The majority of revenue comes from India.

In the past one year, the stock has risen around 379% from Rs 62 to Rs 300.

This remarkable rally can be attributed to robust earnings growth, particularly evident in the company's financial performance for the nine months ending December 2023.

During this period, Sharda Ispat reported a substantial 72% YoY increase in revenue, reaching Rs 1,716 m compared to Rs 1,013.4 m in the previous year.

Moreover, the company witnessed a noteworthy 372% surge in net profit, soaring to Rs 97.8 m from Rs 20.7 m year-over-year. This significant profit growth was driven by an increase in realisation.

Looking ahead, Sharda Ispat is poised to expand its production capacity to meet the growing demand, demonstrating a proactive approach to capitalize on market opportunities.

For more details, see the Sharda Ispat company fact sheet and quarterly results.

#3 Southern Magnesium and Chemicals

Third on the list is Southern Magnesium and Chemicals.

The company is engaged in the business of magnesium metal and related goods. The company manufactures magnesium chips, turnings, granules, and powders. The company has set up a project at Gowripatnam, Andhra Pradesh, to manufacture magnesium metal.

In the past one year, the shares of the company have rallied 229% from Rs 68 to Rs 223 in March 2024.

The recent surge in its stock price can be attributed to several key factors. Firstly, Southern Magnesium and Chemicals secured a significant order for the supply of Magnesium Powder, with an estimated contract value of Rs 288 m.

This sizable order will be fulfilled within the next 12-15 months, contributing to its revenue growth and enhancing investor confidence.

Additionally, the increase in promoter holding from 53.4% in March 2023 to 54.2% in December 2023 has bolstered positive market sentiment. This strong backing by the promoters reflects their confidence in the company's growth prospects, further fueling the positive momentum in the stock price.

Looking ahead, Southern Magnesium and Chemicals aims to focus on improving profitability and diversifying its portfolio.

These strategic initiatives align with the company's long-term growth objectives, positioning it favourably in the magnesium and chemicals industry.

For more details, see the Southern Magnesium & Chemicals company fact sheet and quarterly results.

#4 Frontier Springs

Fourth on the list is Frontier Springs.

Frontier Springs Ltd is the world's leading manufacturer of hot wound springs for transportation, industrial and government applications.

With a state-of-the-art manufacturing facility, covering over 50,000 sq. ft., it offers a modern, streamlined operation that allows us to deliver high-quality springs worldwide. Whether it's an order for one spring or a million, Frontier is ready to meet your requirements.

Over the past year, Frontier Springs stock has demonstrated impressive growth, soaring approximately 226% from Rs 373 to Rs 1,217 in March 2024.

This remarkable performance is attributed to the company securing a milestone order valued at Rs 522 m for the supply of 894 sets of Air Springs.

Frontier Springs is committed to fulfilling this order every month, aiming for completion by the end of the current calendar year.

Additionally, the company has outlined ambitious growth projections, anticipating an increase in freight to 3,000 metric tons by 2027, necessitating a fleet of approximately 500,000 wagons.

To support this growth trajectory, Frontier Springs has procurement plans for 90,000 wagons over the next three years, significantly surpassing the annual average.

Looking ahead, Frontier Springs is poised for expansion into new geographic markets and diversification into related industries. These strategic initiatives align with the company's commitment to sustained growth and innovation, positioning it as a key player in the global hot wound springs market.

For more details, see the Frontier Spring company fact sheet and quarterly results.

#5 Suraj Products

Last on the list is Suraj Products.

The company is engaged in the production of sponge iron by direct reduction of iron ore, pig iron, ingots/billet, thermo mechanical treatment (TMT) bars and generation of power.

It operates through a single segment, finished products from Iron ore.

The company has an installed capacity of approximately 36,000 tons per annum.

In the past year, Suraj Products has witnessed significant stock growth, with its shares surging approximately 219% from Rs 128 to Rs 408 as of March 2024.

This can be attributed to the state-level single window clearance authority (SLSWCA) approving 27 projects worth Rs 6,134.52 crore.

The projects will come up in 10 districts. Among these, Suraj Products will set up a 20,000 MT ferro alloys plant in Sundargarh for Rs 985 m.

Additionally, the company's strong financial performance for the nine months ending December 2023 contributed to its positive momentum.

During this period, Suraj Products reported a notable 38% YoY increase in revenue, reaching Rs 2,530.6 m, while net profit for the quarter stood at Rs 231 m, reflecting a 25.6% year-on-year growth driven by increased sales.

Looking ahead, Suraj Products aims to expand its production capacity and extend its market reach to new territories within India. These growth strategies align with the company's vision for sustained expansion and profitability in the iron and steel sector.

For more details, see the Suraj Products company fact sheet and quarterly results.

Which Other Steel Stocks have Rallied the Most in 2024?

Apart from the stocks above, here are some other best performing Seel stocks of FY24 so far

Company	Current Price (Rs)	Gains in 2024 (%)
Hindustan Copper	285	187%
Kalyani Steels	862.2	185%
Nile	1280.4	168%
Suraj	211	163%
Welspun Corp	513.2	149%
Jindal Stainless	703.3	143%
Venus Pipes & Tubes	1876.8	143%
Maharashtra Seamless	854.1	126%
Ashirwad Steels & Industries	39.4	115%
Godawari Power And Ispat	731.1	106%
Gravita India	994.6	101%
Goodluck India	834.9	100%
Pondy Oxides & Chemicals	636.6	99%
Hindustan Copper	285	187%

Data Source: Equitymaster

Conclusion

The consumption story of India in itself is a compelling reason to start looking for top-performing steel stocks to invest in. The export opportunity is an added benefit.

Infrastructure is the biggest consumer of metals such as steel and copper. The Indian government has embarked on a massive infrastructure drive to drive economic growth. This augurs well for all metal stocks of the country.

Initiatives like Make in India and increased focus on domestic manufacturing can positively impact the steel sector. Policies supporting the mining and metal industry can lead to growth and profitability for companies in this sector.

Policies supporting mining and metal industries, coupled with large-scale projects like smart cities and improved transportation networks, are expected to drive sustained demand for metals like steel.

Given this rapid industrialization and infrastructural development, the metal industry holds significant promise for investors in the country's thriving market landscape.

While past performance isn't a guarantee of future results, it's essential to conduct thorough research, assess the risks, and align investments with one's overall financial goals and risk tolerance.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...