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Sail jumps on likely bonus issue

Source: Capital Market, Tuesday, February 9th, 09:35 AM

Sail is the latest in a list of planned sell-offs aimed at raising funds to cut India's fiscal deficit. India aims to sell stakes in about 60 firms in the coming years. The government's fiscal deficit is estimated to be at a 16-year high of 6.8% of gross domestic product by the end of March 2010.

Steel Authority Of India's net profit rose 98.7% to Rs 1675.55 crore on a 11.2% rise in sales to Rs 9697.14 crore in Q3 December 2009 over Q3 December 2008.

Sail is an integrated steel manufacturing company. The company's products include pig iron, steel ingots, liquid steel, alloy steel, special steel, stainless steel, ferro alloys, ERW pipes, spirally welded pipes, and calcium ammonium nitrate.

Meanwhile, the BSE Sensex was down 20.70 points, or 0.13%, to 15,914.91.

On BSE, 7.40 lakh shares were traded in the counter as against an average daily volume of 14.63 lakh shares in the past one quarter.

The stock hit a high of Rs 213.50 and a low of Rs 205.95 so far during the day. The stock had hit a 52-week high of Rs 258.30 on 6 January 2010 and a 52-week low of Rs 70 on 3 March 2009.

The stock had underperformed the market over the past one month till 8 February 2010, falling 14.48% compared with the Sensex's 9.15% fall. It outperformed the market in past one quarter, gaining 23.25% as against 1.38% decline in the Sensex.

The large-cap state-run steel maker has an equity capital of Rs 4130.40 crore. Face value per share is Rs 10.

The current price of Rs 209.45 discounts the company's Q3 December 2009 annualised EPS of Rs 16.23, by a PE multiple of 12.90.

To issue bonus shares, the company's reserves should be thrice its paid-up capital. As per latest data, Steel Authority Of India (Sail)'s paid-up equity capital stands at Rs 4,130 crore, with consolidated reserves at Rs 24,153.91 crore.

According to reports, the proposal of issuing bonus shares is being discussed by the company and the government.

The Cabinet is yet to take call on Sail's follow-on public offer. The proposal reportedly includes sale of 10% fresh equity from the company and 10% offer-for-sale by the government. Reports suggest that the FPO is likely in the next fiscal year that begins in April 2010.

As on December 2009, the government held 85.82% stake in the state-run firm.


 

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