This small-cap construction firm's shares zoomed 20% to hit upper circuit level; here's why

Shares of a small-cap construction firm saw a sharp uptick in Friday's trading session even as domestic benchmarks stayed flat. SEPC Ltd's stock, formerly known as Shriram EPC Ltd, soared 20 per cent to hit its upper price band of Rs 25.94. At this price, it has gained around 42 per cent in the past one month

Today's strong upmove in the share price came after the company said it received the final nod from The Hutti Gold Mines Ltd (HGML) for a contract valued at Rs 232 crore.

"We would like to inform that our company (SEPC) had received the Final Acceptance Certificate from The Hutti Gold Mines Limited (HGML) for the Contract Agreement received in the year 2013 (for a Total Value of Rs 232 crore) for 'Construction of New Circular Shaft with complete Winding Installations' on turnkey basis at Hutti, Raichur District, Karnataka, India," it stated in a BSE filing.

"The said certificate from HGML was received by us on August 22, 2024, confirms that the systems installed and all electrical, mechanical equipment, instruments, D.C./ A.C. Drives, PLC System were tested with 11 KV grid power and also with Diesel Generator power and found satisfactory. The Certificate also confirms that as per the terms of the Contract one-year warrantee period was also completed," SEPC added.

The company said its standalone net profit for the June 2024 quarter (Q1 FY25) rose to Rs 12.7 crore from Rs 5.2 crore in the year-ago period. Revenue from operations climbed to Rs 175.8 crore from Rs 143.3 crore in the corresponding period last year.

Prior to this, SEPC stated that its wholly-owned arm had bagged a cement project worth around Rs 2,700 crore. "This is to inform you that our Wholly Owned Subsidiary M/s Shriram EPC FZE has received the Notice to commence work on Construction of Cement Project at a total project cost in excess of $325 million (equivalent to in excess of Rs 2,700 crore at current Exchange Rate) from M/s JV OHONGORON SEMENT MS LLC at Tashkent, Republic of Uzbekistan," it said.

On the stock-specific front, SEPC saw heavy trading volume on BSE today as around 2.60 crore shares were last seen changing hands. The figure was way more than the average volume of 40.80 lakh shares. Turnover on the counter came at Rs 63.79 crore, commanding a market capitalisation (m-cap) of Rs 4,054.57 crore. There were 17,07,434 buy orders today as against sell orders of 2,71,683 shares.

Technically, the counter traded higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The stock's 14-day relative strength index (RSI) came at 72.94. A level below 30 is defined as oversold while a value above 70 is considered overbought.

As per BSE, the company's stock has a price-to-equity (P/E) ratio of 131.94 against a price-to-book (P/B) value of 2.80. Earnings per share (EPS) stood at 0.16 with a return on equity (RoE) of 2.12.

As of June 2024, promoters held a 23.24 per cent stake in the firm.