The Hindu Business Line : Essar Steel gains on good profit outlook

In today's trading, the stock gained 9.19 per cent at Rs 29.70 on the BSE with volume of 1.25 crore shares and on the NSE it closed at Rs 29.70, up 9.19 per cent, with volume of 3.24 crore shares.

Of the total shares traded, 17.87 per cent of shares traded on the BSE were for delivery and on the NSE it was 25 per cent.

In the last one month, the stock price has gained 92.86 per cent from Rs 15.40.

Brokers said the interest in the stock is from across the board.

"There has been increased interest from several FIIs and local institutions and this is the main factor for the rise in the stock price," said a dealer with a foreign broking firm.

He said the financial performance of the company in the first quarter and full year is expected to be good.

According to market estimates, the net profit in the first quarter is likely to be in the region of Rs 150-175 crore compared to net profit of Rs 10.25 crore in the corresponding quarter of last year and for the full fiscal, the net profit is expected to be around Rs 700 crore.

The interest in the stock is also in line with the good financial performance for the entire steel sector.

"It is going to be excellent year for the steel sector across the globe and the Indian steel companies are no exception," said an analyst with a foreign broking firm.

Another reason for the interest in Essar Steel stock is on the expectation of its corporate debt restructuring being cleared soon.

According to brokers, one of the possibilities of the package could be reduction in the equity capital of the company by 40 per cent.

"If this happens, the EPS of the company would increase sharply," said a dealer.