Steel Stocks Outlook: Firm next week; SAIL, Jindal Steel in focus

[B. Karthick]

Steel Stocks Outlook: Firm next week; SAIL, Jindal Steel in focus
Saturday, Sep 20

Shares of steel companies are likely to gain ground next week, led
by Jindal Steel & Power Ltd. and Steel Authority of India Ltd.
This week, shares of all but one leading primary steel makers
fell. Investors bought into SAIL, expecting some good news next
Friday, when the Supreme Court takes up the company's environment
clearance case at Raoghat iron ore mines in Chhattisgarh.
Raoghat mines are critical to SAIL's expansion plan as its largest
facility will depend on these mines when it raises its output
capacity.
The decline was led by JSW Steel Ltd., which fell nearly 10%,
while Tata Steel Ltd. and Ispat Industries Ltd. fell 8.4% and 8.1%,
respectively during the week.
Jindal Steel & Power, which slid 6.5% during the week, made some
recovery in the last two days, buoyed by news it has won oil
exploration blocks in Peru.
The company has won exploration blocks in Georgia as well. The
news came after the close of trade yesterday, It is likely to push the
stock up next week.
There is a new direction in the company, with its venture in the
oil and gas exploration business. Even though material gains from
these blocks may not be exactly around the corner, they have a
potential to offer significant value to the company's shareholders.
A setback in Liberia is likely to weigh on Tata Steel Ltd. The
company has been barred from bidding for one of the iron ore assets
there.
We did not seem enthused by JSW Steel Ltd. getting mining approval
in Jharkhand, as many think the reserves may not be up to the mark.
It is a vast tract, but it is likely the reserves are inferior in
quality or scarce.

Week-on-week closing prices of key steel companies' shares, in
rupees, on National Stock Exchange:

Company Closing Level Closing Level
Change
Sep 19 Sep
12 in %
Steel Authority 147.70 140.05
5.5%
Tata Steel 479.50 523.65
- 8.4%
JSW Steel 593.95 658.45 -
9.8%
Jindal Steel & Power 1,484.25 1,588.10 - 6.5%

Nifty 4245.25
4228.45 0.4%
Sensex 14042.32 14000.81
0.3%

End

B.Karthick
Research Analyst.