JSW Steel down by 6.6% on production cut
Shares of JSW Steel, part of $8 billion O P Jindal group, was down by 6.61 per cent at Rs 278 on Friday, after the company announced its decision of cutting its production by 20 per cent from November.
By ET Online |
MUMBAI: Shares of JSW Steel, part of $8 billion O P Jindal group, was down by 6.61 per cent at Rs 278 on Friday, after the company announced its decision of cutting its production by 20 per cent from November.
The declining commodity prices including steel due to global economic slowdown and resultant slowing demand is a major factor, say analysts.
The company posted 5 per cent year on year growth in production of crude steel in October 2008.
PINC Research has given a HOLD recommendation on the stock in its report dated Oct 31. The pressure on operating margins until the raw material integration is achieved is a major concern even though the stock trades reasonably at about 3.75 times its estimated earning for FY10.
Meanwhile, JSW Steel reported strong growth on the top line while profits were affected due to higher cost of production while net sales grew 65 per cent year on year to Rs 4270 crore primarily a result of 58 per cent rise in average realisation. However, operating margins were affected���down 1300 basis points to 19.3 per cent--as cost of production rose 86 per cent. Forex losses, higher capital charges and lower other income resulted in a 41 per cent decline in net profit to Rs320 crore.
The declining commodity prices including steel due to global economic slowdown and resultant slowing demand is a major factor, say analysts.
The company posted 5 per cent year on year growth in production of crude steel in October 2008.
PINC Research has given a HOLD recommendation on the stock in its report dated Oct 31. The pressure on operating margins until the raw material integration is achieved is a major concern even though the stock trades reasonably at about 3.75 times its estimated earning for FY10.
Meanwhile, JSW Steel reported strong growth on the top line while profits were affected due to higher cost of production while net sales grew 65 per cent year on year to Rs 4270 crore primarily a result of 58 per cent rise in average realisation. However, operating margins were affected���down 1300 basis points to 19.3 per cent--as cost of production rose 86 per cent. Forex losses, higher capital charges and lower other income resulted in a 41 per cent decline in net profit to Rs320 crore.
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