Shares of Andhra Cements surged by 10%, hitting the upper circuit after the company submitted draft papers to the Securities and Exchange Board of India (SEBI) for a rights issue aimed at raising ₹180 crore.
This strategic move indicates the company's efforts to strengthen its financial position and attract investors looking to invest in stocks with promising potential.
Approval of the draft by stock exchanges
The company also filed the draft document with the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) to secure necessary approvals. On September 30, the Rights Issue Committee of Andhra Cements approved this proposal, following a previous announcement made on March 28, 2024. The rights issue will enable current shareholders to invest in stocks by purchasing additional shares in the company at a potentially advantageous price.
Debt issue of ₹250 crore is also on the table
In addition to the ₹180 crore rights issue, the board of Andhra Cements had earlier approved a proposal to raise ₹250 crore through a debt issue back in March. This demonstrates the company’s strategic efforts to secure financial backing through various channels, making it an attractive opportunity for investors who are looking to invest in stocks that offer both equity and debt potential.
Stock performance in 2024
At around 12:12 PM, the shares of Andhra Cements were trading 10% higher at ₹94.80 on the NSE. Despite this upward trend, the stock has experienced a 16% decline so far this year, underperforming compared to Nifty's 18% gains. However, for those who invest in stocks with a long-term view, this could present a buying opportunity, especially as the company works to strengthen its financials.
Yearly comparison of stock performance
Over the last 12 months, Andhra Cements' stock has dipped by about 1.5%, whereas Nifty has surged by 32% during the same period. Although the company has faced challenges, its potential to raise capital and improve operations could make it an appealing option for investors wanting to invest in stocks that may offer growth in the coming months.
Andhra Cements: A key player in the cement industry
Andhra Cements, part of the Sagar Group, is a prominent cement manufacturer in India. It operates two major production facilities: Durga Cement Works (DCW) in Dachepalli, Palnadu District, and Visakha Cement Works (VCW) in Visakhapatnam, both in Andhra Pradesh.
The company's main clinker plant is located in Durgapuram, Dachepalli, approximately 180 kilometres from Hyderabad. With cutting-edge machinery, it produces both Ordinary Portland Cement (OPC) and Pozzolana Portland Cement (PPC), providing a solid foundation for investors considering whether to invest in stocks of the company.
Financial performance: June quarter 2024
For the quarter ending June 2024, Andhra Cements reported a net loss of ₹23.6 crore, which showed a slight improvement compared to the ₹24.6 crore loss in the same quarter the previous year.
The company’s revenue from operations significantly increased to ₹63.3 crore from ₹13.2 crore, reflecting its operational growth despite ongoing challenges. This financial trajectory may intrigue those looking to invest in stocks within the manufacturing sector as the company strives to improve its profitability.
Ready to invest in Andhra Cements? Here's why now might be the right time
Andhra Cements' recent efforts to raise capital through a rights issue and its stock's strong performance in hitting the upper circuit highlight the company's determination to improve its financial health.
Although the stock has underperformed compared to the Nifty index, its long-term potential, coupled with its strategic plans, could make it an interesting choice for investors looking to invest in stocks that have room for growth.
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