😲 A Tata Group Stock that has Risen 102% in 6 Days
A lesser known Tata stock is hogging all the limelight nowadays. What's behind its super fast growth?
Disclaimer: Nothing in this blog should be considered investment advice.
The news that the US central bank is going to raise interest rates once again is weighing heavily on the stock market.
Concerns that RBI too will follow up with a rate hike, a move that could impact growth, has led to a lot of share prices falling today.
So, a lot of Tata Group stocks are down.
But one not that well-known Tata Group stock is doing insanely well.
It has risen 102% in the last 6 days, hitting the upper circuit each and every day.Â
The name of the stock: TRF Ltd. And the reason behind its rally? ReadOn to find out.Â
📖 All About TRF Ltd.
TRF Ltd.'s journey began in 1962. It is one of the 90 companies under the umbrella of Tata Group.
But for the past 4-5 months, if you wanted to invest in the company, you had to do it on a Monday.
That's because SEBI placed restrictions on its stock under the Graded Surveillance Measure in June. Huh?
📉 The Fall Before the Rise
The Graded Surveillance Measure is yet another tool that the SEBI uses to protect investors.
You see, any time it feels that a company that seems sketchy, or financially unhealthy is seeing a lot of trade volumes, it puts trade restrictions on it so that investors are deterred from investing and don't end up losing a lot of their money.Â
The Graded Surveillance Measure has six stages, and TRF had been issued a stage three surveillance: which means the stock could be traded only on Mondays and investors would have to pay a 100% surveillance deposit to buy it.
Why was this Graded Surveillance Measure added?
Because the company was in bad shape.Â
In its last financial reports its net worth was negative Rs. 294 crores, because of its high debts.Â
What's more, its revenue has also been declining over the years, while losses have been mounting.
So, the SEBI probably thought investing in the company wouldn't be a good idea for investors.
What's changed then?
📈 The Cause Behind the Rise
Well, Tata Steel has been infusing money into the company for the past couple of years.
Back in May, it bought the company's preference shares for Rs. 13 crores. And in June it bought more such shares for Rs. 165 crores.Â
Currently it has a 34.11% stake in the company.Â
All of these cash infusions have helped the company reduce its debt and increase profits. Its operating income has also risen by 25% year-on year.Â
So, a lot of investors probably had their eye on it. And now that SEBI has also removed the GSM surveillance, investors can't get enough of the stock.
🤔 Other Factors Aiding the CompanyÂ
The company builds heavy equipment and processing equipment for a number of industries like power, infrastructure, ports, steel plants, fertilisers, mining and so on.
Basically, it has its hands in a lot of sectors.
And a lot of these sectors are set to grow right now, most importantly power and infrastructure.
But ReadOn, what about the upcoming rate hike?
Even if a rate hike does come, India is not going to stop growth altogether. Some sectors will continue to grow.Â
In fact, we are in a much better position to grow than other countries.
And with schemes like National Logistics Policy and the GatiShakti Plan, India is now more focused than ever on infrastructure growth.
Which could be a great opportunity for TRF Ltd.
What's more, Tata Motors is also set to see a boom in business with automobile sales rising and the company planning to set up a semiconductor plant. This could be a huge opportunity for TRF Ltd. as well.
⛳ Red Flags
The company does have a few red flags as well. For instance, its past performance.
Despite its presence in so many sectors, the company was making major losses. That could hint at possible management inefficiencies. Especially because its competitors like Axtel and AIA Engineering have been performing well.
It has currently managed to do well mainly because of cash infusions from Tata Steel. But with the steel sector's future a little uncertain right now due to export duties and possible recession, TRF's future could be cloudy.
Plus, currently 75% of its orders come from Tata Steel. Which means it is highly dependent on its promoter: never a good sign.
So, investing in the company could be a risky move.
Will you be betting on TRF Ltd?Â
âš¡In a line: TRF Ltd. stocks are rising like crazy because SEBI recently removed trding restrictions placed on it but its dependence on Tata Steel still makes it a risky bet.
💡Quick question: Which Tata Group stocks are you betting on?
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