Steel Stocks Outlook for the week - 25 to 29.11.2013

Steel Stocks Outlook for the week - 25 to 29.11.2013
www.rupeedesk.in

Steel stocks are seen trading subdued the next week due to expected oversupply in the domestic market, with Jindal Steel and Power seen gaining We believe that, in the short run, the performances of steel manufacturers would continue to be squeezed by oversupply challenges. Considering Jindal Steel and Power's focus on completing its capital expenditure by mid 2014-15, we believes this offers 'huge visibility on the deleveraging process. The stock quotes at 7.3x FY15e EV/EBITDA at with imminent rerating potential reflecting the strong growth assets and balance sheet in the present backdrop.

We are expecting the improving operational cash flows to reduce concerns over the tata steel's debt. The company's net debt as on Sep 30 is 643.34 bln rupees. On a short-term basis, we sees Tata Steel trading range bound with a support of 370 rupees and a resistance of 405 rupees. In the non-ferrous metals segment, the sentiment is slightly positive in the long run owing to positive Chinese economic data. China accounts for around 40-50% of global metal consumption.

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