Steel Authority of India Ltd (SAIL) Stock Analysis

When I look at Steel Authority of India Limited (SAIL) stock with 2 to 3 years investment horizon, it appears to be very attractive at current price (CMP as on 25th Sep 2015: Rs.68). Just consider the following points.

1. SAIL steel capacity is expected to reach around 21.5 million tonnes by March 2017 from capacity of around 13.3 million tonnes as on March 2012. As on March 2014, it had crude steel production capacity of approx. 16 million tonnes.

2. Considering the modest replacement cost of 65000 per tonne, the replacement cost for entire company comes to around Rs. 1.4 lakh crores (1,40,000 crores) against the current market value of around Rs. 29,000 crores.

3. Considering the net debt level of Rs. 45000 crores by March 2017, if one purchase the stock today at roughly 70 bucks, he will be paying an enterprise value of 74000 crores (almost half of SAIL's March 2017 replacement cost).

Portfolio Update - Sep 2014

The supreme court judgement on coal blocks along with weak global cues lead to massive selling in select stocks thereby presenting an opportunity to invest in those names incrementally at attractive valuations. 

Our model portfolio which has been sitting on lot of cash since past couple of months are now filled with lot of stocks along with some cash to utilize in case there is further fall in the market.

Companies and Coal blocks affected by Supreme Court order for cancellation

In the landmark judgement of Supreme Court to cancel 214 of the 218 coal blocks alloted since 1992, there are some big names who are going to be affected severly. Baring NTPC, SAIL & RPower the verdict is negative for all the public - private companies. 

Among the lot the most affected were Jindal Steel and Power, Jaiprakash power Limited, Hindalco, CESC, Usha Martin as their operational coal blocks have been cancelled. Beside that many non-operational coal blocks were also cancelled which had already seen significant amount of investments by the holding companies such as Mahan Coal block of Hindalco Industries.

Following is the list of major operational and non-operational coal blocks that were cancelled and the company which will be subsequently affected.

India Outperforms Major World Stock Markets

India is clearly standing out on the global map as far as the performance of major stock markets in the world are concerned. Key benchmark index SENSEX has outperformed all the major world indices by wide margin and is up more than 36% in 12 months. The second best performing market was Italy which went up 22% in the same period. 

The world's biggest market U.S went up 12% in last one year while the worst performing market among the pack was Russia for obvious reasons. Russian MICEX is up just 1% since September 2013.

Amit Agarwal Portfolio Update

Booking profits in stocks bought in September. Added only one stock as on 2nd Sep for the relative performance issue. In general there is hardly any bargain available for sizable position building. Please check the updated portfolio for details: Amit Agarwal Stock Portfolio