Mining Profits: How Gujarat Mineral Gave 100% Returns In 6 Months
GMDC doubled investors’ capital in just 6 months. It has given 100% returns since January 2022. Here’s a sneak peek at the company!
💼 Stock Name: Gujarat Mineral Development Corp. Ltd.
💼 NSE: $GMDCLTD
⛏️ Origin Story
The story of this company is closely tied to the story of Gujarat. In the early 1960s, as the Bombay State was divided into present-day Gujarat and Mumbai, the newly-formed state needed to ensure its industrial development. This hunger led to the exploration of Gujarat’s wide deposits of mineral resources and eventually, the formation of Gujarat Mineral Development Corp (GMDC), an enterprise majorly owned by the state of Gujarat in 1963. Listed on October 14, 1997, GMDC is acknowledged as one of India’s premier mining organisations today.
⭐ Defining Factors
▪️ Listed on October 14, 1997
▪️ Ranked 132nd among India’s Fortune 500 companies
▪️ Is one of the top 5 organisations in the mining sector in India
▪️ Is acknowledged as one of India’s premier mining organisations today
⚗️ The Atmanirbhar Catalyst
▪️ After fulfilling the goal of making an “Atmanirbhar Gujarat,” the company is on its way to being instrumental in making an “Atmanirbhar Bharat.” GMDC has successfully diversified into thermal, wind and solar power generation.
▪️ The price of each share of this company traded at around ₹5 in 1999.
▪️ On 3 January 2022, the shares of this company were trading at ₹73.85 apiece. On 19 July 2022, the price of shares closed at ₹153.70.
▪️ The company has a good dividend track record and has consistently declared dividends for the last 5 years. For the year ending March 2022, GMDC has declared an equity dividend of 215.00%, amounting to ₹4.3 per share.
▪️ At the current share price, this results in a dividend yield of 2.78%.
💸 Revenue Breakup
▪️ Lignite Operations: 78%
Presently, the company owns and operates five lignite mines in Gujarat. It mined 70 lakh tonnes of lignite in FY20. It is the major source of revenue for the company and contributed 78% of revenues in FY20.
▪️ Bauxite Operations: 22%
The company has been engaged in bauxite mining at Kutch and Devbhoomi for the last 4 decades. It sold 900 MT of plant-grade bauxite and 4.5 lakh tonnes of non-plant-grade bauxite in FY20.
⚡Reasons For The Sudden Spike
The Russia-Ukraine war resulted in demand remaining the same, but a supply shortage of global minerals was observed at the same time. This worked in favour of Indian mineral stocks. Rising mining volume and a strong turnaround in the December quarter performance are the key reasons behind the company’s astronomical performance.
📈 Growth Potential
▪️ Almost debt-free.
▪️ Trading at 1.03 times its book value
▪️ Been maintaining a healthy dividend payout of 20.34%