Financial Daily from THE HINDU group of publications
Tuesday, Dec 03, 2002
Financial Daily from THE HINDU group of publications Tuesday, Dec 03, 2002 |
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Markets
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Stock Markets Price hike hopes add strength to steel stocks Our Bureau
MUMBAI, Dec. 2 OPTIMISM for the steel sector continued with stocks of some companies moving up on the bourses. This optimism is primarily backed by a revival in steel demand leading to an upturn in steel prices in the domestic as well as the international markets, analysts said. In Monday's trade, stocks of number of smaller steel companies moved up following the trend set by Tata Steel and Jindal Iron and Steel Company (Jisco) last week.
There has been speculation that steel companies may hike steel prices in the next few days. With no additional capacities expected in the industry, the improvement in demand augurs well for the companies. Tata Steel, which continued to maintain profitability through the trough period of the steel industry, was able to report a 643 per cent increase in net profit at Rs 203.18 crore (Rs 27.36 crore) for the second quarter of 2002/2003 on account of higher steel prices coupled with improved demand, better product mix and a fall in interest cost. Price upturn alone contributed to 60 per cent of Tata Steel's profitability in the second quarter. In today's trade, Essar Steel moved up 9.88 per cent to Rs 8.90 on the BSE with 16.03 lakh shares traded. Ispat Steel moved up 10 per cent to Rs 5.40 on the NSE on volumes of 3.50 lakh shares. Jindal Vijaynagar Steel gained 6.38 per cent to Rs 5 with 12.37 lakh shares traded on the BSE and Steel Authority of India (SAIL) rose by 5.85 per cent to Rs 9.05 on the BSE with 11.26 lakh shares traded. However, Tata Steel stock remained largely unchanged at Rs 138.95 but 15.93 lakh shares were traded on the BSE. On the NSE, the stock ended at Rs 138.80 with 34.57 lakh shares traded. With the upturn in steel prices, margins are expected to improve considerably helping several steel companies to reduce their debt. Crisil, which undertook a study of the financials of five steel companies, said domestic companies' operating margins are comparable to those of international companies. Analysts said value buying was largely confined to Tata Steel while operator interest was seen in other steel stocks.
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