Steel Stocks Ride High on Hopes of Higher Spend­ing for In­fra Push

The Economic Times - - Companies - RAKHI MAZUM­DAR

Steel stocks are in great de­mand. While Tata Steel hit a two-month high on Wednes­day, SAIL, JSW Steel, JSPL have also gained in the last few days. With a new govern­ment due to take charge soon, ex­pec­ta­tions are run­ning high about a pick-up in in­fra­struc­ture and pro­ject ac­tiv­ity, both of which are likely to boost steel sales. The min­ing sec­tor, too, is hop­ing the courts will of­fer some di­rec­tives that will lift it out of its moribund state.

Tata Steel touched .` 454.45 cross­ing its 52-week high on the BSE dur­ing the day on Wednes­day, be­fore clos­ing at .` 452.15, up 5.91%. SAIL closed at .` 75, up 6.01%. JSW Steel ended the day at .` 1169.15, up 1.33%. JSW’s top ex­ec­u­tives were in Ja­pan and un­avail­able for com­ment. Jin­dal Steel & Power (JSPL) was up 6.06% to .` 260.95 while Ad­hu­nik Me­ta­liks went up 0.33% to .` 46.15 on the BSE. Sesa Ster­lite, a key nat­u­ral re­sources player, saw its stock close at .` 197.15, up 2.18%.

“With a new govern­ment, we ex­pect in­vest­ment in in­fra­struc­ture and power to re­vive and this is likely to kick-start the econ­omy. As far as coal and iron ore min­ing is­sues are con­cerned, it is ex­pected that the courts will pro­vide some clar­ity, hope­fully by June-July,” said K Ra­jagopal, CFO, JSPL Group. SAIL chair­man CS Verma de­clined to com­ment, sim­i­lar views were echoed by Jayant Acharya, di­rec­tor­mar­ket­ing, JSW Steel.

“A new govern­ment at the Cen­tre is widely ex­pected to pro­vide a big push to in­fra­struc­ture. An im­prove­ment in sen­ti­ment is also likely to have a pos­i­tive im­pact on con­sumer durables sec­tor like au­to­mo­biles,” Acharya told ET re­cently. Tata Steel is op­ti­mistic about prospects for the do­mes­tic steel sec­tor, with a se­nior of­fi­cial say­ing re­cently that steel con­sump­tion in In­dia is ex­pected to grow 4.5-5% this year to 75 mil­lion tonnes. “We ex­pect the econ­omy to kick-start, af­ter the new govern­ment takes charge. Fun­da­men­tals of the econ­omy re­main strong and the need for in­fra­struc­ture cre­ation is stronger,” said Tata Steel, vice-pres­i­dent (mar­ket­ing and sales), Peeyush Gupta.

Tata Steel is op­ti­mistic about prospects for steel sec­tor as the con­sump­tion is ex­pected to grow 4.5-5% this year

Anil Agarwal, ex­ec­u­tive chair­man of Vedanta group, which in­cludes Sesa Ster­lite in its fold, said: “Peo­ple have high hopes from the new govern­ment and so has the in­dus­try. In­dia’s fall­ing GDP is pri­mar­ily a func­tion of man­u­fac­tur­ing slow­down, in­clud­ing min­ing and of hy­dro­car­bons. Though In­dia has an abun­dance of re­serves and re­sources of baux­ite, coal, iron ore, cop­per and gold etc., it is spend­ing bil­lions of dol­lars on their im­ports. Hun­dreds and thou­sands of large SMEs can be set up across the na­tion to process our raw ma­te­rial and fur­ther man­u­fac­tur­ing to cre­ate new jobs. The govern­ment should auc­tion nat­u­ral re­sources in the most sus­tain­able and trans­par­ent man­ner, on rev­enue shar­ing ba­sis or high­est roy­alty.” An­a­lysts agree on per­cep­tions about im­proved in­fra­struc­ture spend­ing in the post-elec­tion sce­nario. As Ra­jaji Meshram, se­nior man­ager, cap­i­tal projects and in­fra­struc­ture, at PwC pointed out: “There are hopes ac­cel­er­ated in­fra spend­ing on mega projects like Del­hiMum­bai In­dus­trial Cor­ri­dor and Chen­nai-Ban­ga­lore In­dus­trial Cor­ri­dor etc. will boost steel de­mand.”

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