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Sail moves upwards
June 19, 2003 11:55 IST
Sail was the subject of strong gains today following reports that the scrip will replace Nestle on the Nifty from 4 August 2003.
The scrip of the largest steel manufacturer in the country struck a 52-week high of Rs 14.85 on BSE early today, but eased later and was trading up 5.59% at Rs 14.55 by 11:11 IST. Substantial volumes of over 22.2 lakh Sail shares were traded on BSE till then. Sail has now risen 63.5% from Rs 8.90 on 12 May 2003.
Reports have emerged that the steel PSU will replace Nestle on the S&P CNX Nifty from 4 August 2003. Inclusions or exclusions on the index are usually made on the basis of certain parameters including market capitalisation, liquidity and sectoral representation.
The company is in turnaround mode, having registered a net profit of Rs 241.65 crore for Q4 ended 31 March 2003 compared to a net loss of Rs 417.07 crore in the corresponding period of the previous year. Total income increased by 25.5% to Rs 5,671.43 crore from Rs 4,519.99 crore in MQ 2002.
For the full year, the company reduced losses to Rs 304.31 crore on total income (net of excise) of Rs 17,591.09 crore
The steely performance precipitated from strong demand for steel and a rise in prices.
But analysts caution that domestic steel prices are expected to stabilise at the current levels. In any case, these levels are at least higher than those reached last year. Besides, the sustained demand for steel in both domestic as well as international markets, especially from China will continue to help the company post better results.
Domestic demand will come from the buoyant construction and automobile sectors and the capital goods industry. At the same time, a greater thrust on infrastructure projects, including national highway and roadway projects, will only serve to enhance demand for steel.
International demand for steel, especially from China, is also expected to increase. Recently, China announced higher annual quotas, which should result in a recovery in prices. The world's largest steel importer, China, has decided to buy 9.2 million tonnes of steel from Indian companies over a one-year period following huge construction activity there.
As on 31 March 2003, the government holding in Sail was 85.82%, while institutions and the public held 8.72% and 3.66%, respectively.