The Hindu Business Line : Inclusion in MSCI India Index lifts JSW Steel

JSW Steel shot up over 3 per cent today with little more than its average fortnightly volumes on bourses on its proposed inclusion into Morgan Stanley Capital International’s India Index.

MSCI today announced revisions in the composition of the India Index, with effect from May 30. The index, which is tracked by overseas investors, excluded Tata Tea, MTNL, Bajaj Holdings, Bharat Electronics and Dish TV.

Marginal decline

JSW Steel is country’s fourth-largest integrated steel manufacturer. The JSW Group’s flagship company JSW Steel is also the only Indian company that uses the corex as well as the blast furnace technology to produce steel.

“It is expected that JSW Steel will double its turnover in FY-10E.

Higher share of value-added products to 50 per cent in FY10E from current 35 per cent levels would help the company mitigate marginal decline in realisations, anticipated across major product categories,” said Mr Rajesh Agarwal, Director Research of CD Equisearch.

Noting that JSW buys ore to the extent of 50 per cent from the market, he said that it remained vulnerable to ore-price escalation.

“This affects the company’s efforts to achieve higher cost control, however, with completion of some measures in the hot metal pre-treatment and coal drying plant during the quarter, JSW could neutralise the impact of escalation in input costs,” he added.

Great guns

JSW Steel has posted 14 per cent growth in crude steel production in April 2008, including production of Salem works for corresponding period on comparable basis. The company has also achieved 12 per cent growth in rolled-flat product (hot rolled coils & plates) and 33 per cent growth in rolled long products segments.

The stock has been going great guns recently on overall demand situation for steel items.

It has gained over 41 per cent in the last one month and 19.45 per cent in the past one week.

Analysts felt that the inclusion into MSCI India Index would increase its visibility in the international level.

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