Metal
Stocks Outlook for the week – 25 to 28.08.2014
( www.rupeedesk.in )
Stocks of metal
companies are expected to trade with a negative bias next week following
a hike in royalty
rates for iron ore. The Cabinet on Wednesday approved a hike in the rate
of royalty on iron
ore to 15% from 10%, along with a hike in royalty on other minerals.
Steel Authority of
India being hit the most due to this hike, as the company has the lowest
profitability among
its peers. SAIL would see a hit of about 7-8% on its EBITDA
(earnings before
interest, tax, depreciation, and amortisation margin), Tata Steel 2%, and
JSW Steel and Jindal
Steel and Power around 1%.
Sesa Sterlite may
also be subdued next week due to an ongoing turnover order issued to
the company by a US
court. On Thursday, a US court denied the Vedanta group
company's plea for a
stay on the turnover order.
According to the
terms of the turnover order, Sesa Sterlite cannot repay holders of the
company's $500 mln
senior notes unless $82.75 mln is paid to US based copper producer
ASARCO by Oct 30, the
maturity date of the notes, and it cannot create a lien on its
assets. The company
was asked in 2012 by a US court to pay $82.75 mln to ASARCO
due to breach of a
purchase agreement.
