Shares of Gujarat Mineral Development Corporation (GMDC) have experienced substantial growth,climbing 35.5% in September to reach a new 52-week high of Rs 547 on the BSE on Monday. This surge reflects strong investor confidence,favorable industry conditions,and optimism surrounding the company’s rare earth mining projects.

Trading volumes for the PSU stock have been notably high, indicating meaningful participation from both institutional and retail investors. Over the past six months, GMDC has become a multibagger stock, delivering returns exceeding 107%, with one-year returns standing at 46.5%. The stock has risen by over 1,100% in the last five years, establishing it as a top performer in the mining sector.

The increase in GMDC shares aligns with expectations from the government’s focus on rare earth mining,aimed at strengthening domestic supply chains for critical minerals. These minerals, crucial for electric vehicles, renewable energy equipment, and high-tech electronics, position GMDC strategically as it develops rare earth deposits in Gujarat’s Chhota Udaipur district. The company plans to establish an integrated supply chain from mining to processing, supporting India’s goal of self-reliance in clean energy and technology.

GMDC, India’s second-largest lignite producer and a zero-debt company, has also expanded into thermal, wind, and solar energy, reinforcing its presence in the energy and resources sector. Despite a reported consolidated net profit of Rs 164 crore in the june quarter, an 11% year-on-year decrease, and revenue of Rs 810 crore, down 8% YoY, the stock continues to attract buyers due to its growth potential in rare earth elements and its strong financial position.

However, brokerages are approaching the stock with caution. Nuvama recently maintained a ‘Reduce’ rating, citing high valuations and slower-than-expected progress at certain lignite mines. The firm reduced its target price from Rs 237 to Rs 231, awaiting further developments on GMDC’s rare earth projects.