From ₹193 to ₹525: This midcap stock rallies 170% in 9 months

Shares of Swan Energy, which has a presence in the textile, real estate, oil and gas, and petrochemical sectors, touched a record high on Friday amid sustained buying in the recent past. The midcap stock has witnessed a strong rally in nine months, with the counter surging 172% to hit a fresh record high of ₹525 in intraday today, rebounding from its 52-week low of ₹193 on March 28, 2023. The stock has risen 36% since October 30, 2033, following the acquisition of Reliance Naval and Engineering after the completion of the outstanding upfront payment of ₹231.42 crore. 

On Friday, Swan Energy shares opened higher for the third straight session at ₹519.80, up 1.2% against the previous closing price of ₹513.45 on the BSE. Extending opening gains, the stock gained as much as 2.2% to scale a new high of ₹525, while the market capitalisation rose to ₹13,580 crore.

The stock got a boost today after its board approved the proposal to raise up to ₹4,000 crore through the issuance of equity and debt securities in one or more public and private offerings. The company will constitute a fund-raising committee comprising of the board of directors of the company to deal with all matters pertaining to the proposed fundraising, it says in an exchange filing today.

“The board of directors of the company has approved the proposal to raise up to ₹4,000 crore through the issuance of instruments or securities including equity shares or one or more public and/or private offerings including on a preferential allotment basis and/or a qualified institutions placement and/or rights issue and/or further public offering. The decision was made during the board meeting held on December 28, 2023,” the filing notes.

As per the company, the board will seek the requisite approval from its shareholders through an extraordinary general meeting with respect to the proposed fundraising. The process, timelines, and other requisite details with regard to the extraordinary general meeting will be communicated in due course, it said.

The announcement came days after the company made a repayment of debt of ₹40 towards its entire fund-based facilities of the textile unit to the consortium of banks led by Union Bank of India. The company has also made a prepayment of ₹300 crore debt for its floating storage and regasification unit (FSRU) project.

“The company has made the debt prepayment out of its internal accruals through its subsidiary Triumph Offshore Private Limited (TOPL) to its consortium of senior lenders of the FSRU Project.

In October this year, Swan Energy completed the acquisition of erstwhile Anil Ambani group company Reliance Naval & Engineering (RNEL) as part of its plan to position itself into the biggest private player in the manufacture of naval defence and oil and gas vessels. The company is also aiming to be the largest player in green-shipbreaking and hub for global ship repairing. The shipyard has 2.0 mn square feet workshop and the largest drydock in India.

In the September quarter of FY24 (Q2 FY24), Swan Energy reported a net profit of ₹166 crore compared to the net loss of ₹32 crore in the same period last year. The company’s revenue and EBITDA grew multi-fold on year-on-year (YoY) to ₹1,223 crore and ₹257 crore, respectively, while EBITDA margins improved by more than 2,000 basis points to 21%. The top and bottom line growth was primarily driven by strong contributions from Veritas India, leasing income from the floating storage and regasification unit (FSRU) project, and higher margins in the textile segment.

In May 2022, Swan Energy acquired 55% stake in petrochemicals and petroleum products manufacturer Veritas India for ₹172.52 crore. Veritas is investing ₹1,800 crore to set up a 150 MMTPA (million metric tonnes per annum) PVC plant and 360 MMTPA PMB capacity at Dighi Port. It is also building a throughput terminal (1.4 MMTPA) and bottling plant (60,000 MTPA) at Dighi to cater to ever increasing demand for LPG.

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