Godawari Power - Any Trackers?

Can anyone help me understand that why NMDC, GPIL are falling even though iron ore prices are increasing sharply worldwide?(Indian market corrected till yesterday but today there is a rebound but still iron ore stocks are falling).Today the iron ore price is hovering around 112$ level. Is there any other angle which I am missing?

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Still no sign of fiscal stimulus from China—just the same old policy statements being repeated.

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Could be the lingering effect on retrospective tax rule?

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In a recent filing to the stock exchanges, Godawari Power communicated about 2 new line of businesses which are non-core to mining, iron and steel industry

  1. Setting up a separate unit to manufacture oPVC pipes. This is a commodity business with cut throat competition from established players like Supreme, Astral, Prince, Hindware with a good brand recognition.

  2. The proposal to acquire up to 60% equity stake in R. G. Pigments Private Limited (RGP) for a consideration of Rs.56.75 Crores. Again this is recycling of non-ferrous materials which is non-core to them

Godawarai is not known as a brand outside their current business and how this diversification can help or impact the growth of the company? Any insights from experience boarders who track this company closely is appreciated.

Link to the notification is provided below:

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More than growth, I see these as attempts to diversify business profile from ‘iron dependent’. Management has alluded to Steel as hedge to iron ore bet as well, when inquired about steel investment being RoCE dilutive in nature. Though at very good RoCEs.
Large capex is being done across the industry to increase Iron Ore mining. Lloyds, NMDC and Captive iron ore mines from large steel players. And it is (and likely to remain) a commodity.

Investment in these 2 business line is not substantial. Approximately cashflow generation from 1 quarter.
Option value can be provided. If management sees opportunity to scale and generate value, they will do it. And, they are likely to have cash generation for that.

Disclosure: Invested.

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Godawari Power & Ispat Limited (GPIL) has entered into a definitive agreement to acquire upto 51% Stake in Jammu Pigments Limited at a post money valuation Rs. 500 Crores (approx.).

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It will be a good move if the said synergies are realized by GPIL through this acquisition. There is not much clarity on the foray into oPVC manufacturing which is already a crowded space.

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Just Look at the peer comparison shared on twitter by someone. It does look like a great acquisition. Listed players in this space are really expensive.

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Source for this is presentation shared by gpil management. To communicate acquisition rationale.

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The stock appears to be at interesting levels again after the recent correction. I think certainty of earnings here is quite high given the upcoming triggers over the next few quarters.

The company should be able to do around 2000cr EBITDA in FY26 but I think the rerating will start as soon as the mining expansion approval is in. Only large risks I see would be a state mineral tax a la Karnataka and a significant downturn in the iron ore market globally. Currently prices are hovering around 100$ but long-term consensus is around 70-75$ due to large supply going live.

Disc: Currently invested. May sell at any point without informing. Do your own due diligence.

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