Steel Stocks Outlook for the week (28.05.2012 - 01.06.2012) Stocks of major steel companies are likely to trade in a range with a positive bias next week. Investors will eye the Jan-Mar earnings of state-owned Steel Authority of India Ltd. Better realisations, higher volume and low input costs are likely to help SAIL post a 115% jump in Jan-Mar net profit on a sequential basis. Net sales is seen up 24% on a quarter-on-quarter basis. However, the picture isn't as upbeat on a year-on-year basis, with net profit seen down 10% at 13.62 bln rupees and net sales at 130.97 bln rupees, up 10%. SAIL will report its fourth quarter earnings on Tuesday. Sales volume is expected to increase 23% QoQ to 3.2 mln tn in a seasonally strong quarter. Thanks to lower coking coal cost and higher scale benefits, EBITDA per tn is expected to expand by 46% or 2,493 rupees per tn QoQ to 8,012 rupees.
However, Steel Minister Beni Prasad Verma has not been very happy with SAIL's performance. He said there has been a drop in the company's sales and even expansion plans are not on track. SAIL hopes to reach 19 mln tn production capacity by March. The company has embarked on a 720-bln-rupee expansion to take its steel-making capacity to 24 mln tn by 2013-14 (Apr-Mar). The steel industry continues to remain under pressure due to slowdown in domestic and global demand. Steel prices, which had gained during Jan-Mar, have also started falling due to lacklustre demand. Global steel prices continued their decline with a faster pace during the last fortnight with Black Sea HRC (hot rolled coil) (FoB) export prices fell to $595/tn, lowest since mid-January. Indian prices are slightly protected due to sharp depreciation in rupee to 54.5 against dollar. However our ground check suggests domestic scrap and ingot prices have started correcting during past couple of months due to weakening demand from the construction sector. The macroeconomic picture globally remains gloomy, with uncertainty over the European political scenario and slowdown in China. The Indian scenario is bleak too, with industrial production for March falling by 3.5%. last week, the rupee hit an all-time low of 56 against a dollar. -- 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.
