Archive for the 'Steel' Category

Good picks in Sugar,Cement and Steel sector

October 9, 2008

Friends,

Please have a look at the financial position of the following companies:

Bajajhind: 52 W High Rs 399 Low Rs 82

Capital Rs 14.14 crs Reserve Rs 1420 crs

Sales 07-08 Rs 1743 crs PAT Rs 45 crs
Sales 06-07 Rs 1486 crs PAT Rs 191 crs
Sales 05-06 Rs 900 crs PAT Rs 140 crs

Crushing capacity 100000 tonnes/per day (this will require Rs3500 crs
to put up today.)

Blarampurchini: 52 W High 127 Low 58

Capital Rs 24.82 crs Reserves Rs839 crs

Sales 06-07 Rs 1401 crs PAT Rs (-)42 crs
05-06 Rs 1905 crs PAT Rs 291 crs (18 months)
04-05 Rs 816 crs PAT Rs 125 crs

Capacity 70000 tonnes/per day (present cost Rs 2300 crs )

(Sugar prices have improved to Rs18/kg in four month from Rs14/kg ,
new sugar season will commence in a month)
Prismcement: 52 W High 79 Low 21

Capital Rs 298 crs Reserves Rs 319 crs

Sales 07-08 Rs 892 crs PAT Rs 241 crs
06-07 Rs 771 crs PAT Rs 192 crs
05-06 Rs 573 crs PAT Rs 62 crs

Birlacorpn : 52 W High 385 Low 108

Capital Rs 77 crs Reserves 919 crs

Sales 07-08 Rs 1763 crs PAT Rs 393 crs
06-07 Rs 1593 crs PAT Rs 326 crs
05-06 Rs 1228 crs PAT Rs 125 crs

Ultratechcement : 52 W High 1165 Low 442

Capital Rs 124.49 crs Reserves Rs 2572 crs

Sales 07-08 Rs 5609 crs PAT Rs 1006 crs
06-07 Rs 4972 crs PAT Rs 1166 crs
05-06 Rs 3336 crs PAT Rs 229 crs

SAIL : 52 W High 293 Low 108

Capital Rs 4130 crs Reserves Rs 18933 crs

Sales 07-08 Rs 41517 crs PAT Rs 7536 crs
06-07 Rs 35865 crs PAT Rs 6202 crs
05-06 Rs 29311 crs PAT Rs 4012 crs

All these companies are old and established companies and are leaders in their field. They are highly traded and liquid companies, have FII holding, have good managements, good plant locations and are nearly at their low points due to aggressive FII liquidation. From these angles they should be recovering fast. Their product demand will never go down, they will not face competition from outside, new players will
have much higher cost of production, they have very less of borrowing and have increased capacities out of own generated funds and are low cost producer with assured raw-material sources.

I hope you will find above informative and convincing.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx – A prescription for stock market

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Good picks in Sugar,Cement and Steel sector

October 7, 2008

Friends,

Please have a look at the financial position of the following companies:

Bajajhind: 52 W High Rs 399 Low Rs 82

Capital Rs 14.14 crs Reserve Rs 1420 crs

Sales 07-08 Rs 1743 crs PAT Rs 45 crs
Sales 06-07 Rs 1486 crs PAT Rs 191 crs
Sales 05-06 Rs 900 crs PAT Rs 140 crs

Crushing capacity 100000 tonnes/per day (this will require Rs3500 crs
to put up today.)

Blarampurchini: 52 W High 127 Low 58

Capital Rs 24.82 crs Reserves Rs839 crs

Sales 06-07 Rs 1401 crs PAT Rs (-)42 crs
05-06 Rs 1905 crs PAT Rs 291 crs (18 months)
04-05 Rs 816 crs PAT Rs 125 crs

Capacity 70000 tonnes/per day (present cost Rs 2300 crs )

(Sugar prices have improved to Rs18/kg in four month from Rs14/kg ,
new sugar season will commence in a month)
Prismcement: 52 W High 79 Low 21

Capital Rs 298 crs Reserves Rs 319 crs

Sales 07-08 Rs 892 crs PAT Rs 241 crs
06-07 Rs 771 crs PAT Rs 192 crs
05-06 Rs 573 crs PAT Rs 62 crs

Birlacorpn : 52 W High 385 Low 108

Capital Rs 77 crs Reserves 919 crs

Sales 07-08 Rs 1763 crs PAT Rs 393 crs
06-07 Rs 1593 crs PAT Rs 326 crs
05-06 Rs 1228 crs PAT Rs 125 crs

Ultratechcement : 52 W High 1165 Low 442

Capital Rs 124.49 crs Reserves Rs 2572 crs

Sales 07-08 Rs 5609 crs PAT Rs 1006 crs
06-07 Rs 4972 crs PAT Rs 1166 crs
05-06 Rs 3336 crs PAT Rs 229 crs

SAIL : 52 W High 293 Low 108

Capital Rs 4130 crs Reserves Rs 18933 crs

Sales 07-08 Rs 41517 crs PAT Rs 7536 crs
06-07 Rs 35865 crs PAT Rs 6202 crs
05-06 Rs 29311 crs PAT Rs 4012 crs

All these companies are old and established companies and are leaders in their field. They are highly traded and liquid companies, have FII holding, have good managements, good plant locations and are nearly at their low points due to aggressive FII liquidation. From these angles they should be recovering fast. Their product demand will never go down, they will not face competition from outside, new players will
have much higher cost of production, they have very less of borrowing and have increased capacities out of own generated funds and are low cost producer with assured raw-material sources.

I hope you will find above informative and convincing.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix – Rupee,dollar,oil and inflation

May 10, 2008

By krsna Khandelwal – A veteran market analyst

Friends,

The Rupee has plunged to a low of 41.80 to a Dollar yesterday. It is due to reduced fund flow from overseas . The governments over reaction in regard to the high inflation number and the resultant enthusiasm shown by the key ministers in govt. in the form of pressure on cement and steel producers to reduce prices has given a signal to outside investors that the govt. of the day will go to any extent for the political compulsions . The reforms are no longer seem to be agenda to them . Naturally than why any body would take the risk of parking capital in this country.

It would have been alright for the govt, to correct the situation if the inflation was high due its own policy initiatives earlier. This is not the case and the inflation is due to the economic readjustment in light of the factors not under its control. The inflation apart, there is a relative price adjustment going on for various items of large consumption and the sources of raw material required for energy generation. The govt’s desire to tax petroleum to the hilt on one hand and to to keep prices from moving up in spite of oil touching $125/bbl in international market is the real problem. Yesterday Mr Raha expressed opinion the oil pricing mechanism in India has no rational basis. Mr Raha has been the Chairman of ONGC and should be supposed to know the whole oil pricing affair. When he says that it is an exercise without base , it should have substance. The ultimate synchronisation of local retail oil prices will upset many an apple carts. The wrong investment made in different sectors till then will be real economic loss for the country.

Now understand this by an example. If the petrol sells at higher price there would be no capacity expansion in the auto industry. Since oil marketers suffer the car demand goes up for the public has cheaper fuel to burn. If and when the oil pricing is freed the high fuel cost will diminish demand for cars. Investment made in auto sector will then become unproductive and it will be an economic loss for no plausible reason. The only option is to go open in all ways and rely on market mechanism. The poor should be taken care of by directly helping them by raising funds by taxing richer people.

In light of this would it not have been proper to ask the steel companies to provide steel for construction of dwelling units of 75 sq mtr plinth area to the families without any member having taxable income, at cheaper prices. If the steel is given by producers at lower prices which finds way in to the construction of luxury houses with swimming pools, how is society is helped. So, who these ‘netas’ are crying for.

The market took beating today, not so much for local reason as for the reasons out side. The rumour is that Citi Group will sell assets worth $10 bn. I don’t see the connection here. The markets have come down due to irresponsible attitude of govt. and the fear it imparts.

However, after the advice earlier in the week to sell half your equity stock I advise you to get back in to it gradually but please get armed with ‘panch-tattva’ advice for specific stocks. The high inflation and still no relative change in the interest rates makes me speak this. After all this makes the real rates lower for the entrepreneurs. It requires a lot of steel and cement to construct a cement or steel plant and the share prices of cement and steel companies should go down is difficult to digest. I hope you have taken the cue.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix – The govt. and steel industry

April 7, 2008

By krsna Khandelwal – A veteran market analyst

Friends,

The govt. and steel industry represented by some nine primary producers have worked out a plan to ensure adequate supply and spare curb on current export commitments. This happens to be sort of an eye wash and a come down by the govt. from the high pitched threat to the industry for some thing which is in fact under no body’s control. What is painful is psuedoistic attitude of the govt., why can’t speak in terms of positivity is hardly understood.

The Federation of Indian Mineral Industry has sent a letter to PM accusing the main producers of steel creating scarcity and raise prices. It says Tata Steel and SAIL have captive mines and hence are making hefty profits. Again some thing in bad taste here. Have mineral producers not made hefty profits for themselves when market allowed. They have also said that Tata Steel is acquiring sick plants overseas with the local profits and is protecting jobs outside. I think they have no business to speak about this while what they say is true. I have mentioned else where that if the govt. may act in an irresponsible way why would not the big money will seek to be parked out of the share of influence and circle of control of wily politicians.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix – Govt. has bid good bye to the reformist policies and free trade

April 3, 2008

By krsna Khandelwal – A veteran market analyst

Friends,

The ministers have declared that the steel producers should bring down the prices of steel by 10 to 20%. Now I would like to explain to you the sinister overtones that are carried by this one request or threat which apparently seems to have come from the desire of mitigating the hardships of the people on account of costlier steel.

By this the govt. has bid good bye to the reformist policies and free trade which have been put in place so painstakingly over the past fifteen years by successive govt. . The ruling party itself takes pride in the fact that PM was the one who first usher in the reforms. They have been raising their neck high on different fora for the achievement on economic front by India after the reforms were initiated. In a single stoke they have forgotten it all.

By this declaration the govt. has implied that the steel industry is unjustified in raising the prices as a result of cartel forming. Can it be fact when the one third of steel comes from the government controlled companies? So such blatant dictates without basis are enough to put off the international groups who have come forward to put plants in India for steel production and there by the govt. has ensured that steel remains in short supply for all time to come.

By this declaration the govt. has shown its desire to control the distribution as how else the distribution can be justifiably controlled by the producers as the demand would rise further at lower prices. This is therefore intended at favouring some and denying some, create a black market and give opportunity to bureaucrats to take bribes.

By declaring this the govt. has conveyed that it will be happy with lower corporate taxes from the industry for any lower sales price will result in lower taxable profits. You may see paradox here, the FM has happily gone on to wave farm loans on the strength of higher tax collection.

By declaring this the govt. conveys that tomorrow it will come down heavily on other items if it perceives the prices high without going in to the matter of input cost as it has done in case of steel.

By this the govt. has declared that while it is going to raise salaries of its staff by double or so, it will not allow the steel industry to do so as it will make for higher steel production cost , so steel workers fate has been sealed by govt. .

By declaring this govt. has also declared that it will not let the foreign produced steel to come in country as the lower prices here would not let it. The development will suffer is no concern for govt..

By declaring this the govt. has also conveyed that it will not prefer the import of coal and other raw material required for steel production as by lowering the price of steel the producers will not be in a position to import. The lower steel production is no concern for govt..

By declaring this the govt. has ensured that Indian capital becomes shy again and does not get invested as the govt. will not allow enterprises to make money when opportune but suffer when there is down turn. So, IPOs may now not be successful in getting fully subscribed.

By declaring this the govt. has conveyed that it will not mind if the profits of the builders get increased because it has not put a similar price curb on them so far.

By declaring this the govt. has also conveyed that the producers of steel would not be allowed to get extra profits and would therefore be denied the creation of further capacities. They will not have their own money invest and the banks would not land for their profit making capability is at the mercy of govt..

By declaring this the govt. has ensured the bulls in market suffer and bears rejoice. Govt. was happy when the markets were high and was patting itself on its own back. Now the same govt. is happy to see rather create conditions for its fall. So, it has taken upon itself the task of transferring money from one pocket to another, all as per its own whim.

By declaring this the govt. has conveyed that it will be reducing excise duties on all such items that contribute to rising price index. It will fill its coffers by other more damaging means is an other matter.

By declaring this the govt. has also conveyed that it will not let the public pay high prices for the essential items too and being a farmer oriented govt. would not let the agricultural produce suffer on price front to ensure fair profits to farmers. There would therefore be greater element of subsidy in the next budget and hence be ready for higher personal and corporate taxes. There will therefore be strain on savings and the investment will suffer. The foreigners will not pour in money for the irrationalities of govt. will be hard to digest. Govt. would not mind slower rate of GDP growth even if millions have yet to be brought above the poverty line.

You know while right option is always a single one and wrong options are so many like the truth about any thing can only be one but untruth about it can be innumerable. The govt. has chosen to not opt for the right option. May its fear of loosing the next election that has made it to go this way. Fear takes away rational thinking power is an established fact. The other reason may be that greed is playing its part, if you will not rub some body on the wrong side why would he pay to you to escape. Ransom can be demanded only when you have been threatened enough. I think the industry is passing through such phase, after all money has to be raised for elections and more than the other parties to have an edge.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market