Why is Essar Steel buzzing?

Essar Steel is stuck in circuit, for the second time consecutively, said analysts. It is up 54% in the last one week and there has been quite a rally in the stock, reports CNBC-TV18

There are a few positives that could be pushing the stock upward. The steel cycle is going robust and prices are expected to go up at the beginning of next year. There could be a price increase of about USD 25-40 in the first quarter of next year.

Essar Steel has great plans of expansion. Its capacities could go up from 5-9 million tonne by June 2009. The shares are to be delisted soon. The promoters hold around 87% of the shares. They had made an offer for the remaining 12.97% of the shares. The discovered price was at Rs 48 per share and now it is at Rs 70. They got the requisite amount and the shares will be delisted in the near future.

On a PE basis, with the run up, it is trading 11.7 times on an FY08 basis and 15-16 times on a trailing basis versus Tata Steel, which is trading at 9% or nine times FY08 basis and JSW Steel, which is closing thereabouts at just about nine times FY08 basis.

2007-11-16 16:00:09 Source : moneycontrol