Underperformer JSW Steel seeks solace in technology, rises in esteem

JSW Steel had scaled up 2.52% to Rs 646 at 12:32 IST on reports of its diversification into information technology.

The BSE Sensex, meanwhile, was down 22 points, or 0.14%, to 14,995.

On BSE, 36,489 shares were traded on the counter today. The scrip had an average daily volume of 1.56 lakh shares in the past one quarter.

Shares of India’s third largest steel maker by sales had hit a high of Rs 653 and a low of Rs 629.50 so far during the day. They had touched a 52-week high of Rs 771.40 on 24 July 2007 and a 52-week low of Rs 245.10 on 14 August 2006.

JSW Steel had underperformed the market over the last one month to 13 August 2007, declining 12.95% compared to the Sensex’s fall of 1.67%. It had also underperformed the market over the past quarter, rising 4.62% compared to the Sensex’s gain of 7.81%.

From a recent high of Rs 736.65 on 31 July 2007 the scrip declined 14.59% to Rs 629.15 on 13 August 2007.

The company’s current equity is Rs 163.97 crore, with 16.397 crore outstanding shares of face value of Rs 10.

The current price of Rs 646 discounts its Q1 June 2007 annualised EPS of Rs 112.6 (based on consolidated results) by a PE multiple of 5.73.

JSW Steel has set up JSoft Solutions, a Bangalore-based IT company, that is likely to be spun off as an independent vertical.

Meanwhile, JSW Steel is reportedly planning to raise around Rs 3400 crore in the international markets. The fund raising is expected to be done over the next six to 12 months. The funds are aimed at helping the company’s Rs 17000-crore expansion plans.

Last month, there were reports JSW Steel was in talks to buy a US-based steel plate mill firm for an estimated $1.2 billion. Reportedly, the steel mill has a capacity of 1.5 million tonnes and is owned by a group of private investors.

JSW’s net profit rose 151.2% to Rs 427.78 crore on a 37.2% increase in sales to Rs 2190.72 in Q1 June 2007 over Q1 June 2006.

JSW Steel is part of the OP Jindal Group with interests in mining, carbon steel, power and oxygen.

Source:-http://www.capitalmarket.com

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