Jindal Iron made a strong recovery today after a recent fall on backing by institutions, particularly Alliance Capital. The scrip of the steel major climbed 3.14% to Rs 75.55 on BSE by 12:55 IST. Relatively high volumes were notched up on the counter, at 450,000 shares. Jindal Iron & Steel has now risen 8.3% from Rs 69.75 on 10 March 2003.

Prior to that, the all-pervading negative sentiment as a result of geopolitical tensions saw the scrip losing 28.3% to Rs 69.75 on 10 March 2003 from its 52-week high of Rs 97.20 on 28 February 2003. As per market buzz, Alliance Capital has been active in the stock since yesterday. Bargain hunting is cited as the reason for the institutional support following the scrip's attractive valuation after being battered over the last few sessions. In contrast, the Jisco stock has witnessed sustained buying over the past year on the back of a financial turnaround by the company as well as the rise in steel prices. Between 13 March 2002 (when the stock registered its 52-week low) and 24 February 2003 (when the stock registered a 52-week high), the scrip rose a gigantic 2000 times to Rs 97.20 from Rs 4.80. For Q3 ended 31 December 2002, Jisco reported a net profit of Rs 29.86 crore, compared to a net loss of Rs 15.34 crore in the corresponding period last fiscal.

Market expectations were that the company would post a net profit of close to Rs 30 crore. Total income (net of excise) increased by 59.7% from Rs 259.20 crore in DQ 2001 to Rs 413.98 crore (Rs 4.13 billion) for DQ 2002. Recently, Unit Trust of India approved a financial restructuring package for Jisco, which included a reduction in interest rates.

The company had a total debt exposure of Rs 512.28 crore (Rs 5.12 billion) to UTI by way of 10.5%, 14.25% and 13% non-convertible debentures. As per the restructuring proposal, an average interest rate of 10% is to be charged as against the existing average rate of 13%. In 2001 and 2002, ICICI and IDBI had restructured Jisco' debts. Jisco, at a recent analysts' meet, had said that it remains bullish on the international steel market what with the Chinese market driving growth following huge demand for steel from China. Global crude steel production is projected to increase by 2% to 912 million tonnes in 2003 from 894 million tonnes in the corresponding previous year.

The country's steel production is projected to increase by 9.6% to 195 million tonnes during the above period. It also said the supply- demand equation in the domestic market may push up steel prices further. As on 31 December 2002, promoters held 51.3% stake in the company, while institutions and the public held 10.17% and 27.90% stake, respectively.

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