Gujarat NRE Coke gets a fresh lease of life

Gujarat NRE Coke's stock has refused to give up, the penny stock is almost at its 6 month high. The shares in the last 5 days have given a return of more than 10 per cent. However, the more interesting part is, in the last 1 month the shares have surged by 40 per cent, making it a hot favourite in the category which it operates. The shares 52-week High/Low stand at Rs 4.49/2.45.

On July 11, 2016, the company issued a press release to the national stock exchanges in which chairman and managing director, Arun Kumar Jagatramka in a letter addressed to the company’s shareholders, reflected that the met coke industry has a cyclical nature of 4 years, with 3 years of downturn and 1 year of high upturn. Unfortunately, this cycle was broken by an unexpected and sudden ban on iron ore mining due to which the upturn in 2012 was lost. However, the investors who had been with the company for a long time have earned handsomely. CMD, further mentioned that an investor who had invested Rs.1 lakh in the shares of GNCL on October 1, 2000, at the then closing price of Rs.3 per share has earned a cumulative return of Rs.64.55 lakhs at today’s closing price.

The company is in the process of ramping up its production to an optimum level to satisfy demand and to meet the orders from all its customers. In line with this production plan, the company has booked cargoes of coal of around 1,15,000 MT for the months of June-July 2016 out of which around 65,000 MT has already arrived and is being discharged while the balance cargo of around 50,000 MT is expected in late July. Due to such a positive development the share prices have surged in the last couple of days.  The shares on July 14, as at 10.33 am are trading at Rs 3.90.

Gujarat NRE Coke Limited, is the largest producer of metallurgical coal also known as met coke. The company operates in two business segments: coal& coke and steel. The company produces met coke, is into steel making and power, has wind power energy and utilitises steel scrap to manufacture TMT bars. The company has also forayed into the e-commerce segment through acquisition of SteelRX Corporation, an online company trading in steel and other metals.