Steel Stocks Outlook: 30.07.2012 - 03.08.2012
Stocks of steel companies are seen rangebound next week in
the absence of any stock-specific triggers and will track key indices. The
market trend will mainly depend on Reserve Bank of India's first-quarter
monetary policy review on Tuesday. This week, Jindal Steel and Power and
JSW Steel reported their Apr-Jun earnings. Jindal Steel's earnings were hit
mainly due to a provision of 5.74 bln rupees on account of impairment of
its investment in Bolivia. Earlier this month, the company terminated its
iron ore mining and steel manufacturing projects in Bolivia terming its
government non-investor friendly. The company's consolidated net profit
fell 59% on year to 3.85 bln rupees while net sales rose 18.9% on year to
46.80 bln rupees.
Considering the delay in projects, heightened regulatory
risks and uncertainty on international operations. JSW Steel reported a
sharp 90% year-on-year decline in consolidated net profit at 500 mln rupees
due to foreign exchange and associate company losses. However, strong sales
volume and realisation lifted consolidated net sales by 33% on year to
99.02 bln rupees. Despite iron ore shortage the company posted a strong
operational performance. The company's consolidated operating profit was up
33% on year at 19.1 bln rupees. JSW Steel's FY13 EBITDA estimate by 8% on
strong Apr-Jun margin performance.
The structural story (of the company) remains clouded by
possible delays in ramp-up of mining in Karnataka, high operating and
financial leverage further weakened by structural weakness in global steel
margins, and possible headwind of JSWS-Ispat Industries' merger. The market
will now await earnings of Tata Steel and Steel Authority of India
scheduled over the next fortnight, which will decide the trend for the
steel stocks going forward. Steel companies will continue to face subdued
demand over the next two to three months due to poor monsoon and macro
economic uncertainties. JSW Steel's Commercial Director Jayanat Acharya
expects demand to revive in the second half of the current financial year.
He expects prices to remain stable in the next few months.
By RUPEE DESK [email protected]
--
You received this message because you are subscribed to the Google Groups
"Kences1- Rupeedesk" group.
To post to this group, send email to [email protected].
To unsubscribe from this group, send email to
[email protected].
For more options, visit this group at
http://groups.google.com/group/kences1?hl=en.
