Monday, August 15, 2005

Steel shares strengthen on price hike expectations


Steel shares edged higher extending their recent rebound.
Bhushan Steel rose 5.3% to Rs 197.50, Essar Steel jumped 5% to Rs 61.20,
Uttam Galva Steel gained 2.6% to Rs 52, Ispat Industries rose 2.4% to Rs
22.95, Sail gained 2% to Rs 64, Jindal Vijaynagar Steel gained 1.1% to Rs
289, and Tisco rose 1.1% to Rs 406.75.
Stocks like Tisco and Ispat got additional boosts from news flow regarding
overseas acquisitions.
15 lakh shares changed hands in Ispat, 12 lakh shares got traded in Sail, 11
lakh shares changed hands in Essar Steel, and 3.8 lakh shares changed hands
in Tisco.
Steel shares have staged a solid rebound in the past few days on
expectations that steel makers would hike prices from September 2005
following a recovery in global steel prices.
In the last one week to 12 August 2005, the combined market cap of 45 large
steel companies rose 4.5% to Rs 68,745 crore. In the past one month to 12
August 2005, their market cap jumped 16.6%.
It may be recalled that steel companies cut prices in recent months due to
weakness in global steel prices caused by a pile up of inventories.
Meanwhile, as per reports in a section of the media, Tisco plans to acquire
a south-east Asian company this year.
Ispat, meanwhile, has finalised the acquisition of Bulgaria's largest steel
mill, Kremikovtzi. Global Steel Holdings – a unit of Ispat Industries - said
it had acquired the majority stake previously held by Bulgarian Finmetals
Holding in a deal estimated at worth around $ 400 million in cash and future
investments. The Ispat unit has been in talks to acquire Kremikovtzi since
last year.

Supreme Industries leaps up


Supreme Industries jumped 8.9% to Rs 300 after the company said it proposes
to develop its properties at Mumbai and Salt Lake in Kolkata.
The stock zoomed up 8.9% in opening trades to Rs 300. 21,085 shares were
traded in the counter on BSE.
Investors are currently pursuing stocks of companies which have huge assets
in terms of property and land (real estate). Companies with property in
Mumbai are especially hot as land rates in the metropolis have been sky-high
over the past few months. Recently, NTC sold its properties in Mumbai at a
hefty rate.
The company’s announcement of a liberal dividend of Rs 9 per share for FY
2005, too, helped the rally in the counter. The company announced liberal
final dividend along with Q4 results on 12 August 2005.
The stock marched ahead of the results announcement. From a recent low of Rs
256.20 on 9 August 2005, the stock put on 7.4% in three trading sessions to
Rs 275.40 on 12 August 2005.
Earlier, a correction had gripped the counter when it fell to a low of Rs
256.20 on 9 August 2005 from a high of Rs 282.45 on 15 July 2005.
For Q4 June 2005, the company reported a 131% growth in net profit to Rs
13.73 crore (Rs 5.93 crore). Net sales jumped up 10.4% to Rs 246.40 crore
(Rs 223.02 crore). The sharp spurt in net profit was primarily due to the
immense growth shown by other income to Rs 5.69 crore from Rs 0.99 crore in
Q4 June 2004.
A substantial reduction in interest cost also boosted net profit. Interest
cost declined 28.5% to Rs 5.79 crore from Rs 8.10 crore in Q4 June 2004.

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