Jindal Strips found itself propelled higher in morning trades on Friday after a huge block deal was believed to have been conducted on the counter by Prudential ICICI at Rs 127.05 per share.
By 11:40 IST, the scrip of Jindal Strips jumped up 4.49% to Rs 138.50. Volumes touched 430,000 shares on the counter on BSE so far. The volumes traded so far are equal to over 6.6% of the floating stock (floating stock is considered to be the shares held by the public and institutions) in the company.
As on 30 September 2002, promoters held 43.02% stake in the company, while the public and institutions held 32.36% and 2.07%, respectively.
In morning trades a huge block deal of 300,000 shares was reported on BSE. As per market talk, Prudential ICICI is the buying party in the deal, however, who the seller is, is not yet known . The deal was believed to have been executed at Rs 127.05 per share, which is Friday's low.
However, it is the anticipation of impressive results from the company that is actually driving the stock, dealers believe. Institutions have been active on the counter over the last few sessions and are picking up stocks from the open market. The market expects the company to register a massive growth in net profit to Rs 200 crore (Rs 2 billion) on a top line of Rs 2,000 crore (Rs 20 billion).
For the first half of 2002-03, the company registered a 105% rise in net profit to Rs 33.07 crore on a 58% increase in net sales to Rs 870.01 crore (Rs 8.7 billion).
Jindal Strips was incorporated in November 1970 and became public in 1975. It was promoted by O P Jindal and associates. The company, which started with a single plant at Hisar, has become a multi-plant, multi-location company. It manufactures stainless steel strips at Hisar, wide strip hot and cold-rolled coils from imported slabs at Vasind and sponge iron at Raigarh. JSL is one of the few companies in the iron and steel industry without any technical collaboration; all its technology is developed in-house. The stainless steel produced by the company is mostly used for utensils, while cold-rolled coils are partially used captively by a group concern for GP/GC sheets and the remaining is sold to the automobile and two-wheeler industry.
Results are expected to be good following a sustained rise in steel prices in the domestic as well as international markets. The rise was also attributed to increased domestic demand, which pushed steel prices higher to touch international levels. A decline in exports from Russia, Korea and Japan due to the rise in demand in their respective domestic markets also eased the competition for Indian steel firms in the global markets.
According to reports, in the current fiscal (since April 2002), steel makers, on an average (which includes producers of cold rolled steel, hot rolled steel and galvanised steel), have already raised the prices by Rs 5,000 per tonne and are expected to further increase them in the coming months. Further, the low inventories of steel companies will propel manufacturers to increase prices, as per reports.
With major user industries like automobiles and housing construction ruling strong and the surge in demand for steel pipes expected from the oil and gas sector apart from water transportation segment, the domestic steel industry is likely to forge ahead.
Meanwhile, analysts tracking the steel sector say that for the first six months of 2003, the steel sector may outperform expectations following firm steel prices in the domestic as well as global markets. However, for the second half, it would be difficult to take a call on the sector, they say, being not in a position to predict the prices of steel. Steel prices are expected to rise, but not in the same manner as was witnessed in 2002. Also, domestic steel prices are expected to move in line with global markets.