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Tuesday, June 21, 2011

Visa Steel Ltd:-Buy/sell/,growth prospects and recommendation,news and results,target price and analysis,views and outlook,multibagger

Calls review:Visa Steel Ltd
Recommended price:20(10.4.09)
Present price:61

Scripscan:Visa Steel Ltd
Traded in:Nse-bse

Story:Visa Steel currently manufactures an array of products like pig iron, coke and chrome concentrate. Pig iron and coke account for around 90% of its topline. The company has a total capacity of 225,000 tonnes of pig iron, 400,000 tonnes of coke and 100,000 tonnes of chrome concentrate.Considering the rising demand for value-added steel products, the company plans to consolidate its existing fragmented raw products like coke and pig iron. Stainless steel will replace coke and pig iron as the company’s leading product by the end of FY09. If everything goes as per plan, the company will have a stainless steel capacity of 0.5 mt by December ’09. To achieve this target, Visa Steel is expanding its backward operation in modular phases. First, it commissioned a 50,000-tonnes ferrochrome plant in November ’07. It is now setting up a sponge iron plant with capacity of 300,000 tonnes and a waste gas recovery power plant of 50 mw.Besides the above expansion plans, the company has a joint venture with Baosteel of China to manufacture 100,000 tonnes of ferrochrome in India.Steel sector has witnessed strong growth in recent years, with steel production almost doubling in the past six years to 53 million tonnes (mt). This, along with the strong global outlook for the steel sector, has raised the ambitions of domestic steel companies, which are now investing in backward integration to maximise their returns and derisk their finances from fluctuations in input prices. Visa Steel is one such small-sized pig iron and coke producer, which aims to emerge as an integrated stainless steel producer by the end of ’09.The effect of expansion and integration will start reflecting in Visa Steel’s financials in two phases. In the first phase beginning FY09, its topline and bottomline will reflect the gains from investment in sponge iron, ferrochrome and power plants. In the second phase, the 0.5-mt stainless steel plant will begin to contribute to its financials from FY11onwards. However, once the stainless steel plant gets operational, sponge iron, pig iron and part of its coke and ferrochrome capacities will be consumed internally. So, it is important to consider the financials for FY11. The company’s earnings per share for FY11 are estimated at Rs 18-20,.This makes it an attractive stock pick for investors with a horizon of 3-4 years.

Present update:Tripled your money in last 2 years can triple further in the next 3-4 years.

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