Financial Daily from THE HINDU group of publications
Saturday, Jul 30, 2005
Financial Daily from THE HINDU group of publications Saturday, Jul 30, 2005 |
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Markets
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Stock Markets SAIL betting on firm price Jayanta Mallick
Kolkata , July 29 IS SAIL finding the trade winds favourable? Price and inventory signals in the international and domestic markets suggest so. According to a senior company official, after a global and local depression on the product price front in the past couple of months, steel industry is now not only witnessing a price stabilisation, but sensing early signals of firming up also as international inventories have been shrinking steadily. HRC prices have of late been inching up, according to industry insiders, after recording a fall of over $100 a tonne. "Experts predict that from September onwards steel prices may confirm a clear upward trend," the official mentioned. Chances of further price fall in the domestic market also appear slim, even during the monsoon, when demand is historically soft. "The domestic inventory is not great and construction activity is not off in many parts of the country because of scanty rain," an industry source observed. Steel import is also unlikely to go up in view of the prevailing 5 per cent customs duty maintaining parity with international prices, experts feel. "SAIL's bottomline is likely to improve in the second half of this fiscal on better price and margin on lower coal price. The proposed merger of IISCO with it, expected in the later part of this fiscal, may give it a one-time tax benefit on account of the accumulated losses," a fund manager said. IISCO, a subsidiary of SAIL, has reported net profit in 2004-05. The merger would add productive capacities (3.52 lakh tonne saleable steel, 3.35 lakh tonne pig iron, prime coal and ore mines) worth over Rs 5,000 crore to that of SAIL. The demands for IISCO's products (structurals & special sections) are steadily growing for increased infrastructure and construction activity. "Yuan appreciation and the proposed JV with Kudremukh for 3 ore mines would also be positive for SAIL. A 41-per cent rise in 2005-06 Q1 PBT indicates higher growth prospect for EPS this fiscal," Mr Rajesh Agarwal of CD Equisearch said. The stock price of SAIL, however, still does not reflect the changing dynamics. The counter declined by 8.03 per cent to close at Rs 52.70 with over 65 lakh shares traded on the BSE alone.
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