Gallantt Ispat - Steel producer DRI route

Provided steel demand remains good.


Capacity - 99k
Price iron/ton = 35k
Rev = 350cr (company doing more due to floor & real estate)


Capacity = 3L ton (mngt interview dt 16/jan/18 on cnbctv18)
Price iron/ton = 35k (assuming)
Rev = 1050cr
Npm = 12% (13% in q23fy18)
Np = 126cr

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What do you think will be the debt level?Environmental clearance?Management seems to be pretty nice

Company has 200cr debt as on q2fy18 (including working capital). Since expansion is behind us. I don’t it rising much. Company has declared further expansion, we need to see how do they proceed with.

What changed your opinion so quickly?

For 9mfy18 interest outgo is 3.17cr. I imagine they will pay bigger amount this quarter.
For earlier years the interest outgo seems reasonable to me.


You can check Q2FY18 balance sheet yourself on BSE website. I think 200cr debt in not for the full year. Let us wait of fourth quarter numbers.

Excellent results for Tata Sponge. Gallantt is also a sponge iron manufacturer.

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Hello Whats your take on steel sector prospects in India in near n mid term in general n Gallantt Ispat in particular?

Will Prakash industries crashing inspite of posting good results have some adverse impact on gallnt ispat as well?is the stel sector being derated?

Any update on long overdue subsidy payment to Gallantt Ispat from UP Govt and expansion?

Co shud post good results due to captive mkt in Eastern UP

Steel prices are holding. You can look at yesterday’s interview of MD of Godawari power and ispat on Cnbc.
I don’t think they have received the subsidy as of now.

Disclaimer- Invested. Views may be biased. This is no buy/sell recommendation.

@Vivek, If you have not seen this , have a look. CARE has come up with their analysis on steel cycle.

There are certain & obvious red flags which i want to raise:

Check the shareholding pattern of the company, almost 97% is controlled by the promoters.
64% is the direct shareholding and the rest ~33% is being held by a complex web of shell companies
with multiple cross holdings.Individual share holders comprise just 3%.

Last time i checked almost a year back and noticed that all the shareholder companies (Holding almost 33%) are based in Kolkata with similar addresses, AAR COMMERCIAL COMPANY LIMITED, CAMELLIA TRADELINK PRIVATE LIMITED etc etc. They all seem Paper shell companies.

Also if you notice the share price since its debut on NSE, you will notice that whatever be the market conditions this script is un affected, the free float being negligible the promoter seems to easily fix the share price at any value they seem OK with. May be capital gain/loss management?The script remains at same price for months alltogether.

Aug 2014 to Feb 2016 the script was at fixed price of 380 Rupees in a straight horizontal line, whether the results were good or bad.Suddenly the script rose to 600 in 2 weeks for no apparent reason and then was made to fall to 200 very swiftly.

The reason given for fall from 600 to 200 was that UP govt was contemplating acquiring company’s land for a metro Project in Gorakhpur. At That stage even the DPR study for Mtero was not initiated,moreover the company is situated in outskirts of Gorakhpur city where the metro will never go.Obviously the company just used it as an excuse.

Individual shareholder is on its own in this company, the script price will always be dictated by the promoters and not by the markets or steel cycle!!


The oddest part is how all the companies are in kolkatta.Every single one of the top ten non promoter entity is in kolkatta.

These companies will have too much control over the share price.

The prices howers around a price for a long time.

Whats your take on Gallant Ispat results? seems OK at first glance

Results seem reasonable to me, nothing great. If I remember correctly raw material cost is higher this quarter & write-back of subsidy.

But I believe full benefit of expanded capacity will come into play this year.


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Been tracking this company for a year or so now.

i) Management is very good on Capital allocation. Their previous capex cycle, paying off already. The top line & bottom line growth in past 4 years have been highly impressive.
Dec 17 to Dec 18 Quarter- Sales up by 146% and Profit up by 46%
ii) As per Feb filings are now going for a 970 crore capex, (awaiting EC) with work to begin Sep 2019.
iii) Have sizable market share in UP
iv) They have the subsidy case in Supreme court pending : The SC isn’t disputing the lower court rulings that UP govt has to pay up the subsidy to Gallantt Ispat (30 crore already dispersed. 320 crore + another 300+ crores in no interest loan pending to be sent). Thing in question is on mode of disbursement ie the no interest loan part. Gallantt Ispat filed a motion to fasten up the process. Matter has been heard & the final order has been pending since Dec 2018.
v) Gallantt Ispat debt is 250 crore mainly on back of past expansion which has been completed.
vi) They also have been doing backward integration. Signed a PPA deal with UP Govt to supply 50MW power from Nov 2018

So, if I put things together.
600crores + to come from subsidy. Current Market Cap is 840 crores & fixed assets are 450crore+. 250 crore in debt. As per management in CNBCTV18 a while back, subsidy when it comes in will be used to pay off debt and rest used in upcoming capex.

To me, looking at the recent growth in topline, bottomline and the valuation of assets, subsidy money to come in, capex on horizon, it presents a astute management with a steel company in very good shape with good growth for next few years.

Question though is on the shareholder pattern. No institutional investments till now. Elara were in it but moved out few years back. SEBI had them in possible shell company list in 2017 but were subsequently audited and cleared completely. The questions others have asked here is valid on why so many non-promoters group all registered in Kolkata and infact few of them in same address ‘Crooked Lane…, Kolkata’

Company has been based of Kolkata as well. But In the EGM that happened 3 weeks back, they have shifted the registered office from Kolkata to NCT, Delhi (is this a sign of good changes happening ?)

Disc : (no SEBI registered) I have invested a small % in portfolio.

Business wise, everything looks rosy including clear evidence of a very efficient management. But at same time,I don’t want to take the big leap (yet) considering concerns over shareholding pattern. I am a novice in Value Investing.

So, question to experienced folks : Considering above points , what would be your take on this company ? (not asking for a investment advise)

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I have been tracking this and invested too. As per my view, this is one of the top class capital utilisation. Getting the Capex done through internal accruals majorly is always a good sign for a company. There is huge land bank too which they are monetising gradually (you can refer real estate income in annual report). Company and business wise there is no issue. But the only issue here is lack of liquidity and to an extent I feel that its operator driven. I too was apprehensive regarding absence of institutional shareholders. But considering the supreme court judgement on subsidy disbursement and the given expansion plans, future looks rosy.


Amalgamation of Gallantt ISPAT with Gallantt Metal completed and the combined entity is renamed as Gallantt ISPAT.
There are some additional restructuring happened

  • Some subsidiaries are sold to promoters

  • Proposed cement plant is carried out by sold out subsidiary and land taken for Metro project still not completed

  • Wheat production for FY22 is 1/10th of the FY21, seems these mills are also getting sold

Major capex are done with palletisation plant alone is pending. Current available capacity is almost twice of the production in FY22. This could help company to grow its revenue for sometime


Gallantt Ispat.pdf (3.2 MB)
This has some minor details about the difference in both the plants operations

12 posts were merged into an existing topic: Gallantt Metal Ltd