Friends,
The SAIL’s capacity is going to go up to 26.2 M/T by 2010 at an outlay of Rs 54000 Crs from the present capacity of 14.6 M/T . By a simple calculation we arrive at a figure of around Rs 4500 Crs towards cost of setting up one million capacity . Applying a lower figure for the present capacity at Rs3000 Crs per million tonne towards costs we arrive at a valueation of Rs 45000 Crs approx for it. Taking Rs 20000 Crs as invested out of self generated funds by SAIL , we may safely value the company at Rs 65000 Crs which works out to Rs160 per share. The present price of SAIL’s equity share is close to this figure but considering the RONW at far higher rate than ordinerily is the case for most companies we should be comfortable to give at least 100% premium to the present enterprise value of Rs 65000 Crs as earlier arrived at. By this simple and resonable calculation it may be said that given a more congenial environment , the SAIL’s share may trade well beyond Rs 300 per share. I have not given any value to the hidden assets of the company and for its investment in subsidery companies while working out the enterprise value.
The crude steel production for 07-08 has gone up to 34.71 M/T rising by 10% per annum since 02-03. Similarly, the finished steel production touched 55.27 M/T mark in 07-08 against 37.17 M/T in 02-03. These are very encouraging figures. India’s steel demand is going to remain stronger in the near future without doubt.
There have been 193 MOUs signed with various states covering a planned capacity of 243 M/T for an out lay of Rs 5.14 lac crores.
May I therefore say it is high time to invest in SAIL not listen to the noise making you jittery about investing.
HariOm,
krsnaKhandelwal
