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Why RattanIndia Enterprises Share Price is Rising

Nov 3, 2023

Why RattanIndia Enterprises Share Price is Rising

There has been lots of speculation about the recent market developments around drones and how they are affecting various industries, especially the military.

And their fame is not just limited to the Russia-Ukraine war. China is in news for working on a kamikaze drone that could be launched underwater, amid mounting tensions with Taiwan.

But then there are other good use cases too. As space exploration becomes the next obsession amid global superpowers, drones offer a low-cost access to space.

Then there are cases like the Telangana government successfully delivering Covid-19 vaccines in the year 2021. Soon, they could be used to deliver organs for transplant in a timely manner.

One of the best ways to measure which side is winning the market for drones, is to look at recent sales and the projections in the coming years. It isn't a perfect picture, but it gives us a good sense for how the industry is doing.

As per NITI Aayog estimates, the Indian drone market is expected to reach US$ 50 bn over the next 15 years.

From one perspective, these numbers are not surprising. Even if we take these estimates with a pinch of salt, the supernormal growth in drones is a given.

So, it's only a matter of time before select listed companies that are participating in the drone revolution start booming.

One such drone company - RattanIndia Enterprises - is in the news recently after its stock price saw a sharp run-up this week. In the past five days, the stock price has rallied over 11% while in 2023 so far, the stock is up over 35%.

Let's take a look at reasons driving the rally and what lies ahead for the company.

#1 Certification of its Drone Product

Earlier this week on Wednesday, share price of RattanIndia Enterprises spiked 10% after the company received DGCA's certification for its drone product.

The company announced that Throttle Aerospace Systems (TAS) has received type-certification for its drone product, DOPO, from the Directorate General of Civil Aviation (DGCA). It's a small-class drone weighing less than five kilogrammes with a flying time of 49 minutes.

Throttle Aerospace is a subsidiary of NeoSky. It's the first Indian company to receive a provisional drone license from DGCA, qualified for the Government of India's Production-Linked Incentive (PLI) scheme, and is licensed to make drones for the defence industry.

#2 Settlement of Dues Pertaining to FAME Subsidy

While the recent surge may be attributed to the certification of new drone, shares of the company have been in focus due to various other reasons.

The company's EV subsidiary Revolt was among the electric two-wheeler makers accused by the government for selling vehicles without complying with the localisation mandate.

In August, Revolt Intellicorp settled a long-standing financial matter pertaining to the FAME subsidy and paid Rs 500 million to the Ministry of Heavy Industries.

This cleared some air surrounding the company's violations of the FAME guidelines.

#3 Increasing Focus on Emerging Sectors

While the BSE website may categorise RattanIndia Enterprises as a diversified commercial services company, it's not just an ordinary company focusing on one particular segment.

The company has four growth areas where it is investing heavily and becoming future ready. It's involved in e-commerce, EVs, fintech, fashion brands, and of course drones.

The company launched a direct-to-consumer (D2C) fashion brand in February this year - Neobrands.

Meanwhile, in August this year, it also announced significant progress for its EV business by launching a limited-edition stealth black RV400 electric motorcycle.

In the fintech space, RattanIndia has its own fintech platform - BankSe. It's a one-stop tech-driven financial solutions provider, to analyse multiple life-stage and financial parameters of customers.

What's got investors excited is the company's foray into new-age businesses. Despite being devoid of revenues and profits, the company's foray into new age tech has helped keep it insulated from negative sentiment.

What Next?

After reporting losses for the past couple of quarters, RattanIndia reported strong growth in its first quarterly earnings for FY24.

The company's revenue spiked 76% YoY while it also posted a profit of Rs 1.8 bn compared to a loss of Rs 2.2 bn reported in the same period a year ago.

If you go through the company's latest investor presentation, you'll notice that it has projected strong revenue and profit growth across key segments. RattanIndia is making a serious dent in many new age industries.

Take for instance its drone subsidiary, Neosky. It's coming up with consumer drones that could be used for filmography - from capturing travel videos, weddings, wildlife, and so on, a booming market in the digital age.

It's also making 70% indigenously built anti-drones that are used to neutralise drones that go out of control or enemy drones.

The company has earmarked Rs 1 bn for the drone segment. It has also invested in Matternet, a US based global leader in drone logistics. Matternet is the company that launched world's longest drone delivery route in Switzerland. And it's also offering services in medical delivery.

While all is currently working in its favour at the moment, it's difficult to predict the company's future performance just after one good quarter. The company has to live up to certain expectations now or else it's only a matter of time before investors realise its flaws.

How RattanIndia Enterprises Share Price has Performed Recently

In the past five days, RattanIndia share price is up 11%. In the past three months, the stock is up over 30%.

While in 2023 so far, shares of the company have rallied 35%.

RattanIndia Enterprises has a 52-week high of Rs 69 touched on 5 September 2023 and a 52-week low of Rs 32 touched on 28 March 2023.

chart

About RattanIndia Enterprises

RattanIndia Enterprises is active in a wide range of business activities.

It's the flagship company of the RattanIndia group which included companies like RattanIndia Power, among others.

It holds 18.5% stake in RattanIndia Power, which is engaged in the generation and supply of thermal power.

To know more, check out RattanIndia Enterprises' financial factsheet.

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

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Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Yash Vora

Yash Vora is a financial writer with the Microcap Millionaires team at Equitymaster. He has followed the stock markets right from his early college days. So, Yash has a keen eye for the big market movers. His clear and crisp writeups offer sharp insights on market moving stocks, fund flows, economic data and IPOs. When not looking at stocks, Yash loves a game of table tennis or chess.

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