/ Tata Sponge Iron Has More Than One Reason To Cheer ~ Ways2Capital|Stock Tips|Stock Market Tips|Intraday Stock Tips|Stock Trading Tips|NSE BSE Tips

Tuesday, 11 April 2017

Rising sponge iron prices, raw material sourcing issues for peers and strengthening rupee may help Tata Sponge IronBSE 4.15 % to turn around business. Its cheap valuations further makes the stock attractive. 

Sponge iron is used in steel manufacturing as a substitute to scrap steel. The domestic price of sponge iron has risen by over 64% to around Rs 18,000 per tonne in April from the lows seen in mid-2016. It has gained over 18% since the beginning of 2017.

In the December quarter, the company's sponge iron business posted a marginal profit of Rs 7 lakh against losses in the previous two quarters.The March quarter results are yet to be declared. With 390,000-tonne capacity, Tata Sponge is the leading sponge iron manufacturer. It has been running its plants at almost full utilisation for the last two quarters. According to various reports, other players, mostly unorganised, are struggling with sourcing of iron ore due to re striction on the iron ore production in various regions. Tata Sponge has an edge as it sources mostly from Tata SteelBSE -1.44 % at an arm's length price.
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