JSW Steel hits 52-week low on CBI raid report; Morgan Stanley downgrades to 'under-weight'

NEW DELHI: The shares of JSW Steel Ltd touched their 52-week low of Rs 540 on the Bombay Stock Exchange (BSE) on Monday on reports the CBI has conducted searches on the company’s premises in Bellary in connection with illegal mining.

However in a clarification, the company cleared there are misleading media reports of CBI raids on JSW Steel Ltd’s Vijayanagar unit at Bellary and the company strongly denies any such raids.

The clarification also suggested the CBI team visited the company’s Vijayanagar works today morning and sought certain information about procurement of iron ore.

“JSW Steel has been procuring iron ore from various sources for its steel production requirements and every tonne procured is accounted, paid for and is in compliance with applicable rules and regulations,” said the report.

At 12:05 p.m., shares of the company were trading 6.9% lower at Rs 550 on the BSE and JSW Ispat shares were trading lower by 3.7 per cent at Rs 12.55.

Morgan Stanley Downgrade:

Morgan Stanley has downgraded JSW Steel to ‘under-weight’ from ‘equal-weight’ and has cut the target price to Rs 528 from Rs 732, citing adjustments made to iron ore, coking coal, steel price assumptions and Karnataka iron ore mining ban.

“Economic risks imply risks to (current) steel prices. This can be negative for (JSW) Ispat’s earnings in particular,” Morgan Stanley said in a note. JSW steel owns 49.3 per cent in JSW Ispat, as per the National Stock Exchange of India.

The brokerage has cut the earnings estimates for JSW steel by 16.2, 19.04, 17.9 per cent for FY12, FY13 and FY14, respectively.

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