The Monnet Ispat counter, which closed at Rs 163.85 on Monday, is said to be deriving gains from the company's sourcing strategy with regard to coal.

It is expected to stay isolated from volatility of coal prices, as sourcing needs will be met from captive mines. The cost of producing sponge iron will stand lowered by about 25 per cent in 2008, while that of producing steel will come down by about 20 per cent that year, compared to fiscal 2006 prices.

The company's diversification into power generation is also being noted in market circles. Its net revenue may well grow at a CAGR of 23 per cent over the next 2 years, analysts suggest.

Some of them expect the EBITDA margins to improve from 25.9 per cent in fiscal 2006 to 35.5 per cent in fiscal 2008.

Nilanjan Dey

(This article was published in the Business Line print edition dated September 12, 2006)
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