The Hindu Business Line : Small-cap steel stocks turn attractive

Mumbai, Nov. 14 Though the boom in the infrastructure sector seems to have benefited the steel sector as a whole, small-cap steel companies have attracted investors attention of late.

On Wednesday, the stock prices of companies such as Uttam Galva, Sunflag Iron and Steel, Ensa Steel and Sal Steel hit all-time high. They all gained more than 10 per cent, with Uttam Galva and Sal Steel gaining 20 per cent and 19.98 per cent respectively.

Order books

“There has been a good rally in the steel sector in the markets of late. We can see that from the frontline stocks that the interest has percolated into the smaller cap stocks as well,” said Ms Anita Gandhi, Head Institutional Business, Arihant Capital Markets Ltd.

The economy has been doing well and there has been an increase in the number of infrastructure projects. Many companies’ order books are full, say analysts. “Everything is booming, right from realty to cement to steel. And with the Asiad and Commonwealth games also scheduled to be held in India next year, the order books of these companies are loaded. They have increased their capacity and some of them are even running at 100 per cent capacity. Almost all the companies have doubled or tripled their order book positions,” said Mr Sanjay Someshwar of Ventura Securities.

This sector has been attracting a lot of attention, say market men. “The steel prices have almost doubled with the sector doing well and most companies having good order book positions,” said a merchant banker.

The outlook for this sector seems to be quiet positive, with predictions for this sector looking strong. “By next year, you can see both the steel and cement sector out-performing as our country is developing at such a fast pace,” predicts Mr Someshwar.