Shares of JSW Steel hit a fresh 52-week high of Rs. 467 on the NSE in Tuesday's intra-day trade. This is after the company acquired Bhushan Power and Steel (BSPL) and thereafter became the largest steel firm in the country with a capacity of 27 million tonnes per annum (mtpa, analysts at Jefferies India mentioned.
Meanwhile global brokerages including JP Morgan and CLSA also iterated their bullish stance on the sector and see more upside for these firms. As a result, steel sector shareswere more in demand in today's trade.
With the acquisition, JSW Steel will be able to augment its presence in Eastern India. "Land availability at BPSL provides JSW Steel scope for further brownfield capacity expansions, especially in eastern India where it has a weaker presence. JSTL also plans to explore synergies with its earlier-acquired Monnet Ispat as the two facilities are located less than 100km apart," analysts at Jefferies added.
For the Bhushan Power acquisition, the enterprise value (EV) is pegged at Rs. 19400 crore. Jefferies analysts further suggest that while the acquisition will not result in substantial earnings impact, the company's net debt shall rise by about 95.
Now as per the media supports, JSW Steel has provided its EOI for possible stake in public sector unit Neelachal Ispat Nigam Ltd. Other companies in the race for the public entity are Arcelor Mittal Nippon Steel and Tata Steel.