Uttam Galva finds favour on price hike

Uttam Galva Steels surged 7.33% to Rs 36.60, after raising prices of all its products by Rs 1,000 per tonne for quarterly contracts, and by Rs 2,000 per tonne in the domestic spot market. As many as 8.44 lakh shares were traded on the BSE.

The stock has traded range-bound after rising smartly by late-July 2006. From Rs 27.35 on 21 July, it rose to Rs 33.65 by 14 August, only to remain range-bound thereafter. The stock moved between Rs 31 and Rs 35. The stock closed at Rs 34.10, on 29 September 2006,

At the current market price of Rs 36.60, Uttam Galva trades at 3.38 times its Q1 June 2006 annualized EPS of Rs 10.82.

Uttam Galva had raised the price of all galvanised steel products by Rs 500-1,000 per tonne, on 8 September 2006, due to a rise in zinc prices and input costs.

Uttam Galva Steel recently lost a bid to acquire the Detriot Cold Rolling Mill in the US. As per reports, it is keen on an acquisition, which will strengthen its presence in the US, and will offer value-added offerings for the automotive and other sectors.

The company also plans to set up greenfield units in India and abroad. It is currently expanding capacities by adding new ones, and plans to set up greenfield projects in India and abroad.

Uttam Galva Steels manufactures cold rolled and galvanised products catering to automobile, white goods, engineering and construction sectors. The company exports 15,000-20,000 million tonne of materials for construction and commercial use to the US market, out of a total 30,000 million tonne.

In March 2006, Uttam Galva Steels bagged an order from Stemcor to supply steel over 3 years. As per the deal, Uttam Galva will fix the price of its products every quarter, thereby ensuring factoring of market dynamics.

Uttam Galva had registered a net profit growth of 4.40%, to Rs 22.57 crore (Rs 21.62 crore) for Q1 June 2006. Net sales rose 4%, to Rs 549.80 crore (Rs 528.54 crore).

Souce: Capitalmarket