Steel Stocks Witness 25.7% Rise In M-cap Since Jan

Updated: Apr 25 2002, 05:30am hrs
The stocks of steel & steel products companies have been attracting market attention since January 1, 2002. This has been largely on expectations of a turnaround and consequent hike in demand for steel.

This growing interest in steel & products stocks can be seen in a study of market capitalisation of 31 steel & products stocks during the period January 1- April 23, 2002.

The aggregate market capitalisation of 31 steel & products companies increased by 25.7 per cent to Rs 6,114 crore on April 23, 2002 from the level of Rs 4,864 crore on January 1, 2002. Most of the steel & products companies like Jindal Iron & Steel, Kalyani Steels, Electrosteel Castings, Essar Steel, Mahindra Ugine, Southern Iron & Steel and Lloyds Steel were responsible for this increase.

Significant increase was seen in the case of Jindal Iron & Steel, whose market capital increased by 100.9 per cent to Rs 47.72 crore on April 23, from Rs 23.75 crore on January 1, 2002. Recently the promoters of Jindal Iron & Steel Company have increased their stake in the company by 5 per cent. As a result, the promoters now hold a little over 48 per cent in the company.

This probably helped to increase the market capital of the company. On the other hand Kalyani Steels also showed a significant increase of 104.0 per cent to Rs 30.69 crore from Rs 15.05 crore.

This can be explained from the third quarter profit performance. The net profit of Kalyani Steels increased by 1037.5 per cent to Rs 1.82 crore during October-December 2001 from the level of Rs 0.16 crore during October-December 2000. The sales of the company also increased by 101.1 per cent during the same period. Here 31 steel & products stocks have been considered for market capitalisation study during January 1, 2002 and April 23, 2002 simultaneously.

The closing share prices have been computed from the official price lists published by Bombay Stock Exchange (BSE). Among others, positive changes of 25 per cent and more in market capitalisation was seen in the case of Tisco (27.1 per cent), Ispat Indus (48.1 per cent), Bhushan Steel (43.4 per cent), Sunflag Iron & Steel (32.5 per cent) and National Steel (47.7 per cent). However, it would be a mistake to think that all steel & products stocks showed an upturn. Only six companies namely Choksi Tubes, Saw Pipe, Shah Alloys, Nahar International, ISIBARS and Ferro Alloys Corp showed decline during the study period. The market capitalisation of Nahar International declined by 33.3 per cent to Rs 5.52 crore on April 23 from Rs 8.28 crore on January 1, 2002. Out of 31 steel & products companies, 25 companies’ market capital has increased during the study period.

The top five in terms of market capital in a descending order on April 23 are Tisco (Rs 4,012.71 crore), Jindal Vijaynagar (351.51 crore), Electrosteel Casting (Rs 332.29 crore), Saw Pipes (Rs 289.23 crore) and Jindal Steel & Power (Rs 233.74 crore). Of these, the highest increase was witnessed in the case of Electrosteel Casting (55.3 per cent) followed by Tisco (27.1 per cent and Jindal Steel & Power (18.4 per cent).