Indiabulls Securities Ltd is bullish on Steel Authority of India Ltd (SAIL). It has maintained a ‘buy’ rating on the company with a target price of Rs 192.

According to Indiabulls, interested investors can purchase the stock on declines with a strict stop loss of Rs 116.
 
Today (July 15), the company’s shares opened at Rs 136, as against its last closure at Rs 139.45 on Monday (July 15), on the Bombay Stock Exchange (BSE). Current EPS and P/E ratio stood at 18.24 and 7.40 respectively. The share price has seen a 52-week high of Rs 292.50 and a low of Rs 123.10 on BSE.

If investors have already invested in the company’s stock then it is wise to remain invested in the stock. The stock has great potential. It can still exhibit superb surge. It will achieve the target price as the company has aggressive growth plans and strong operating capabilities.

Steel Authority of India recorded 36% rise in domestic sales for June 2008 at 1.11 million tons as against the same period of the last year.

The total sales of the company climbed to 2.65 million tons during the quarter ended June 2008.

To maximize production of its value added items (special steel), SAIL produced a million tons of such products during the quarter that is 41% over the same period last year.

SAIL plans to establish two new steel plants in Madhya Pradesh with a total investment of Rs 880 mln. The units are likely to be set up within 18 to 36 mths.

Moreover, it also plans to establish a small Rs 1.5 mln steel processing unit in Kashmir.

The company has also signed up MoU with BEML for supplying equipment required for BEML’s modernization and expansion plan.

SAIL has also identified more than 71 potential projects for availing carbon credits and rising concerns of global warming

During FY08, SAIL’s results exceeded expectations as the Company achieved the highest ever domestic sales of 12 mt because of strong domestic demand.

Going forward, the company expects steel demand to grow at a healthy rate in CY08 and CY09, driven by robust demand from the BRIC countries. The International Iron and Steel Institute expect global steel consumption to grow at 6.7% yoy in CY08 to 1,282 mt and by 6.3% in CY09 to 1,363 mt.

To cater to this increasing demand, SAIL is aggressively expanding its production capacities.