GMDC shares rally over 35% in September, hit fresh 52-week high intraday. What’s behind the surge?

Shares of Gujarat Mineral Development Corporation (GMDC) continued their strong upward momentum, surging 35.5% so far in September and touching a fresh 52-week high of Rs 547 on the BSE on Monday.

The rally has been supported by robust investor interest, sectoral tailwinds, and optimism surrounding the company’s rare earth mining initiatives.

The PSU stock has witnessed significant trading activity with heavy volumes, underlining strong participation from both institutional and retail investors. GMDC has turned into a multibagger over the past six months, delivering returns of more than 107%, while its one-year returns stand at 46.5%.

Over the last five years, the stock has skyrocketed by more than 1,100%, making it one of the standout performers in the mining sector.

The sharp rise in GMDC shares comes amid heightened expectations from the government’s push towards rare earth mining to strengthen domestic supply chains for critical minerals.

These minerals, essential for electric vehicles, renewable energy equipment, and high-tech electronics, have placed GMDC in a strategic position as it develops rare earth deposits in Gujarat’s Chhota Udaipur district. The company aims to build an integrated supply chain from mining to processing, aligning with India’s broader vision of self-reliance in clean energy and technology.GMDC, India’s second-largest lignite producer and a zero-debt company, has also diversified into thermal, wind, and solar energy, strengthening its presence in the energy and resources space.Despite reporting a consolidated net profit of Rs 164 crore in the June quarter, down 11% year-on-year, and revenue of Rs 810 crore, down 8% YoY, the stock has continued to attract buyers, driven by the company’s growth prospects in rare earth elements and its strong balance sheet.

Brokerages, however, remain cautious. Nuvama recently retained its ‘Reduce’ rating on the stock, citing expensive valuations and slower-than-expected ramp-up at certain lignite mines. It trimmed its target price from Rs 237 to Rs 231 while awaiting clearer developments on GMDC’s rare earth projects.

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