Recommendation From Textiles And Steel Sector

DSIJ selects two aggressive stock picks in every issue, with a 15 day horizon based upon the bullish trend during that period. For this issue, we are recommending companies from the Textile and Steel Sector.

Sumeet Industries

Sumeet Industries manufactures and exports polyester filament yarn. The company offers products, such as polyester chips, polyester yarn and polypropylene yarn. On financial front, Sumeet Industries’ revenue has increased by 34.76 per cent to Rs 369 crore in Q1FY17 as compared to the same period of the previous financial year. The company’s operating profit too increased by 20.69 per cent to Rs 25.99 crore in Q1FY17 on a yearly basis. Its net profit also has been boosted by almost double to Rs 8.31 crore in Q1FY17 as compared to the same period in the previous fiscal year. The company is working for its quality improvement and value-added products. Sumeet Industries at present has been working to reduce its cost significantly. The company had installed some engines for reduction of power cost and we can see US Dollar is also stable presently. Its loan repayments are continuously going down and that is because its interest burden going down. After strong financials in Q1FY17, there is enough optimism for improvement in the coming quarterly results. The company is going to consider its quarterly results on October 17. At this juncture considering all the pros and cons, it is a BUY from us.

Tata Steel has declared its steel production data for first half of the current financial year. The company has witnessed a robust data on its production front. Its hot metal production has increased by 17 per cent to 3.12 million tonnes in Q2FY17 on a yearly basis. Tata Steel’s crude steel production too has risen by 13 per cent to 2.82 million tonnes in Q2FY17 as compared to the same period in previous financial year. Its saleable steel production also has increased by 11 per cent to 2.71 million tonnes in Q2FY17 on a yearly basis. Tata Steel’s blast furnace has achieved lowest best coke rate of 372 kg/thm in Q2FY17. The company’s sales in automotive segment has risen by 7 per cent on yearly front. Its availability of additional volumes has enabled 12 per cent YoY growth in sales of industrial products and project segments. Hence, we recommend our reader-investors to BUY the stock.