Tata Steel: Rs.604/- Target Rs.650/-.
Good Management logistics for having completed almost cover for raw material supply for Indian operations and slowly now covering supplies to Corus group. With Teeside is on the way out and South African unit is going thumps up, there is lot of steam in Tata steel. This is the fourth largest steel producer in the world . Again there is talk of increasing the price of certain types of steel
Excerpts from interview of MD of Monnet Ispat (Financial express)
“Q: What is the demand acceptance or resistance to this price hike and how much can you go? At what point will the landed price become a rival?
A: If you see the overall industry as such—the steel industry remains to be on a very sound footing. India is growing rapidly and it is the India story for the next probably one or two decades. There is a lot of steel consumption and the steel consumption is going to increase rapidly as well. But this is just a very temporary kind of a thing where monsoons have just set in and for strange reasons—nobody is really been able to put a finger on as to why the demand suddenly fell after April.
But, yes, it has been a little muted but we are very confident because overall the industry looks on a very sound footing and form October onwards we see steel prices going up by at least 10% from where they are today and cost not going up further because I think that’s gone up enough. Therefore, the steel makers will continue to enjoy decent and good margins.
Q: What is the landed price of steel for the product that you are making? Is the difference wide enough for you to go ahead and hike and not expect people to turn to importers?
A: Yes, that’s what I meant. From now up to October if we increase about 7% to 10% I think that’s the margin we are looking at. I think we will be able to push that much without losing.”
2. Bank shares:
It is better to quit bank shares for the time being. They are all overvalued. When any crash of market comes, bank shares will lead the fall as their rise earlier. There may be a nominal increase in repo rates which will not have any impact on the stock market. Already the advance tax of most of the banks in the quarter is not on the increase as compared to last year quarter but their share price doubled. So exercise caution. Also competition is hotting up and there will be pressure on margins.
3.Cairn India : (Rs.332) -Target Rs.340)
Cairn Energy is going to arrange for increase the open offer price to minority share holders . Open offer will be from Oct 11 to Oct 30 subject to SEBI’s approval. The present open offer is Rs.355 per share and Rs.405 to cairn energy. There is likelihood of Rs.405 for minority shareholders also. For this independent directors are appointed to look into this for satisfying minority shareholders and get maximum surrender from them.
Reliance industries: Rs.1010/- (Target Rs.1020)
Hold it. There is a talk about increasing the price of gas and proposal is submitted to Indian govt for consideration.
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