Steel Sector

Buy Tata Steel With Target Of Rs 817

TATA STEELWe expect Tata Steel's EBITDA to grow at 42% CAGR over FY10-12, driven by its increasing share of profitable Indian operations with additional capacity at Jamshedpur, turnaround at Tata Steel Europe (TSE), capital restructuring, leaner cost structure, partial resource integration, and improving steel profitability. We expect Tata Steel's consolidated net profit to be Rs60.7bn in FY11 and Rs64.0bn in FY12. We find the stock attractively valued at 4.8x FY12E EV/EBITDA.

1) Brownfield expansion of 2.9mn tonnes at Jamshedpur to increase share of profitable Indian operations (FY11E EBITDA/t of USD382 vs. consolidated USD141);

Buy Tata Steel With Target Of Rs 817

TATA STEELTata Steel’s consol revenues at Rs290.9bn improved on account of higher realisations (up 19% YoY) and improved product mix, despite 7% YoY decline in volumes. Consequently EBITDA grew by 16% YoY to Rs34bn and blended EBITDA/t was at USD122 vs. USD112 in Q3FY10. Adjusted PAT was up by 139% at Rs100bn.

Tata Steel India (TSI): EBITDA/t at USD387 was up 15% YoY and 10% QoQ due to better realisations (14% YoY growth), volume growth (3% YoY), improved product mix, and cost efficiencies.

Sell Tata Steel With Stop Loss Of Rs 640

Sell Tata Steel With Stop Loss Of Rs 640Technical analyst Alpesh Furiya maintained 'sell' rating on Tata Steel Limited stock with four-day targets of Rs 595 and 575.

According to analyst, the interested investors can sell the stock with a stop loss of Rs 640.

The analyst added that the stock is looking weak at the moment so it is advantageous to sell it at this time.

Today, the stock of the company opened at Rs 1584 on the Bombay Stock Exchange (BSE).

The share price has seen a 52-week high of Rs 737 and a low of Rs 448.65 on BSE.

Sell Call For Bhushan Steel with target price of Rs 350 : PINC Research

Buy Call For Bhushan Steel with target price of Rs 350 : PINC ResearchBhushan Steel's Q3FY11 revenue at Rs19.4bn grew 36% YoY due to 30% surge in sales volume to 467kt, mainly on sale of 94kt of HRC from under-trial Orissa phase-II (1.9mntpa HRC). Operating profit rose 38% YoY to Rs5.4bn with OPM expanding 36bps to 27.7% as Bhushan met ~50% of HRC requirement captively. PAT rose 23% YoY to Rs2.8bn as interest, depreciation cost remained low pending capitalisation of Orissa phase-II.

JSW Steel crude steel production surges 9% in January

JSW Steel crude steel production surges 9% in JanuaryThe leading steel firm JSW Steel has informed that there has been a remarkable growth in its crude steel production in the month of January.

The company has issued this statement in a press release today. It has said that, there has been a growth of almost 9% in its crude steel production in January against the same month in the previous year.

The overall crude steel production has gone up to 5.80-lakh tonnes in the month under review. Last year the company had produced 5.33-lakh tonnes for the similar month.

Buy SAIL With Target Of Rs 184

Buy SAIL With Target Of Rs 184Technical analyst Salil Sharma maintained 'buy' rating on Steel Authority of India Limited (SAIL) stock to attain a target of Rs 184.

According to analyst, the investors can buy the stock with a stop loss of Rs 156.

The stock of the company, on Feb 03, closed at Rs 164.40 on the Bombay Stock Exchange (BSE).

The share price has seen a 52-week high of Rs 258.55 and a low of Rs 157 on BSE.

Current EPS & P/E ratio stood at 13.22 and 12.27 respectively.

JSW Steel Result Review by PINC Research

JSW Steel Result Review by PINC ResearchJSW Steel's standalone revenue at Rs58.1bn grew 26% YoY due to increased volume (up 12% YoY) and improved realisation (up 13% YoY) on better product mix and higher steel prices. However, adj. EBITDA at Rs10.1bn declined 2% YoY as operating cost/t rose 20% YoY on higher iron ore and coking coal cost. PAT at Rs3.8bn grew 18% YoY on lower interest and tax outgo.

Tata Steel FPO subscription covered 6 times

The FPO of Tata Steel Ltd. has been oversubscribed by six times. The 34.77 billion rupees ($762.5 million) public offering has become a success as it has pulled a huge amount from the investors. Friday was the final day of the subscription and the investors have shown a great confidence in the Indian steelmaker.

The FPO from Tata Steel has become a success as it has pulled a huge amount from the investors.

The rules that investors must pay the entire proposal amount are the reason for most of investors waited to submit their offer until the final day of a public issue.

Posco issues to be settled shortly: Anand Sharma

Anand-SharmaOn Thursday, Commerce Minister Anand Sharma with his South Korean counterpart has said that the issues which are interrupting the Posco project in Orissa would be soon resolved.

South Korean trade minister Kim Jon-Hoon has said on Thursday that both countries should work together to locate a solution if there are any environmental concerns. He is in India to join in the India-Korea joint meet.

There are some issues and very soon the problems will be removed. The necessary clearances will appear and the remainder issues will get settled as stated by Sharma.

Tata Steel Ltd FPO Analysis by Fairwealth Securities Limited

tata-steelFairwealth Research Desk rates the Follow-on Public Issue (FPO) of TATA STEEL LTD a subscribe for value pickers. The issue opened on Jan 19, 2011 an is closing on Jan. 21 2011. The face value is Rs 10 per share and the price band for the issue is Rs. 594-610. It is a 100% book building aggregating up to Rs 3477 The FPO proceeds will be used to fund its brown filed expansion of Jamshedpur plant amounting Rs 1875cr while Rs 1090cr will be used to pay redeemable non-convertible debentures.

Tata Steel FPO Note by PINC Research

Tata Steel FPO Note by PINC ResearchTata Steel's FPO price band of Rs594-Rs610/share is attractively priced at 4.7x-4.8x FY12E EV/EBITDA. At the upper band, the company would raise Rs34.8bn (57mn shares) diluting ~5.5% of its post-issue fully-diluted equity. Post FPO, promoters' stake on fully diluted basis would decline by 1.7% to 29.5%. The proceeds of the issue would be utilised mainly for part-funding of capex at Jamshedpur (Rs18.8bn) and payment on maturity of debentures in FY12 (Rs10.9bn).

Buy Bhushan Steel With Target Of Rs 436

Buy Bhushan Steel With Target Of Rs 436Technical analyst Rajesh Satpute has maintained 'buy' rating on Bhushan Steel Limited stock with a target of Rs 436.

Mr. Satpute said that the investors can buy the stock with a stop loss of Rs 415.

The stock of the company, on January 17, closed at Rs 414.40 on the Bombay Stock Exchange (BSE).

The share price has seen a 52-week high of Rs 545 and a low of Rs 254 on BSE.

Current EPS & P/E ratio stood at 43.94 and 9.52 respectively.

Steel Authority of India Limited (SAIL) Result Review : PINC Research

Steel Authority of India Limited (SAIL) Result Review : PINC ResearchRaw material cost woes continue; EBITDA/t at new low

In Q3FY11, SAIL's revenues grew 15% YoY to Rs115.1bn on higher volume (up 11% YoY) and improved realisations (4% YoY rise). However, EBITDA declined 30% YoY to Rs18.0bn on higher raw material, employee and power cost. Consequently, EBITDA/t declined to a 2-yr low (and ~6-yr low excl. Dec'08 qtr) to Rs5,517. PAT declined 34% YoY to Rs11.1bn despite lower interest expense and fall in effective tax rate (32.0% vs 33.9%).

Sell SAIL With Stop Loss Of Rs 178

Sell SAIL With Stop Loss Of Rs 178Technical analyst Rakesh Bansal of New Age Wealth has maintained 'sell' rating on Steel Authority of India Limited stock with a target that lies between Rs 144-140.

According to analyst, the investors can sell the stock with a stop loss of Rs 178

Mr. Bansal added that it is better to sell the stock at this time as it looks weak.

He also said that the interested investors can buy the stock again on declines for medium or long term.

Today, the stock of the company opened at Rs 167.25 on the Bombay Stock Exchange (BSE).

Long Term Buy Call For SAIL

Long Term Buy Call For SAILTechnical analyst Rajesh Agarwal of Eastern Financiers Ltd has maintained 'buy' rating on Steel Authority of India Limited stock.

The analyst said that the investors can buy the stock on dips of 5%.

The analyst added that the investors can hold the stock for a period of 6 to 12 months

The stock of the company, on January 11, closed at Rs 175.55 on the Bombay Stock Exchange (BSE).

The share price has seen a 52-week high of Rs 258.55 and a low of Rs 170.70 on BSE.

Current EPS & P/E ratio stood at 14.59 and 11.97 respectively.

Buy Jindal Steel & Power With Stop Loss Of Rs 690

Buy Jindal Steel & Power With Stop Loss Of Rs 690Technical analyst Imtiaz Qureishi has maintained 'buy' rating on Jindal Iron & Power Limited stock with a target of Rs 740.

The analyst said that the stock can be purchased with a stop loss of Rs 690.

The stock of the company, on December 30, closed at Rs 718.90 on the Bombay Stock Exchange (BSE).

The share price has seen a 52-week high of Rs 754 and a low of Rs 605 on BSE.

Current EPS & P/E ratio stood at 19.15 and 37.37 respectively.

Buy Call For JSW Steel with target price of Rs 1,362: PINC Research

Buy Call For JSW Steel with target price of Rs 1,362: PINC ResearchJSW Steel has proposed to acquire, subject to approvals, 41.3% stake (post full dilution) in Ispat Industries, led by Pramod and Vinod Mittal, by equity infusion of Rs21.6bn (preferential allotment of 1.09bn equity shares at Rs19.85). Mandatory open offer to minority shareholders would follow. With this acquisition, JSW's capacity in India would increase to 11.1mntpa, and is set to reach 14.3mn tpa by FY11-end as 3.2mn tpa brownfield expansion in Karnataka gets commissioned.

Key highlights

Hold Tata Steel With A Target Of Rs 685

Hold Tata Steel With A Target Of Rs 685Technical analyst Hitendra Vasudeo has maintained 'buy' rating on Tata Steel Limited stock with a target of Rs 685.

The analyst said that the stock can be purchased with a stop loss of Rs 674.

The stock of the company, on December 21, closed at Rs 675.55 on the Bombay Stock Exchange (BSE).

The share price has seen a 52-week high of Rs 737 and a low of Rs 448.65 on BSE.

Current EPS & P/E ratio stood at 80.87 and 8.33 respectively.

Buy Call JSW Steel Limited : Fairwealth Securities Limited

JSW-Steel-LimitedJSW Steel Limited (JSWSL) is the second largest private sector steel maker in India. The company provides for a broad range of products which include Hot Rolled Product, Cold Rolled Product, Galvanized Product and Pre-painted Galvanized Product. The company consists of the most modern, eco-friendly steel plants with the latest technologies for both upstream & downstream processes.

KEY INVESTMENT RATIONALE:

Buy Call TATA Steel Limited : Fairwealth Securities Limited

Tata-SteelTATA Steel, the flagship company of Tata group, is among the top ten global steel companies with an annual crude steel capacity of over 28MTPA. It is now the world's second-most geographically-diversified steel producer with operation in 26 countries and a commercial presence in over 50 countries.

KEY INVESTMENT RATIONALE:

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