Stocks in Action For 10th July 2012

As per media reports, India’s largest steel maker, Steel Authority of India (SAIL), plans to invest Rs 1.31 lakh crore to expand its production capacity to 45 million tonnes per annum (MTPA) by 2020. The company is already in the process of increasing the capacity from 14 MTPA to 21 MTPA by 2015 with investments of Rs 72,000 crore. On top of this it plans to invest Rs 1,31,000 crore to raise capacity from 21.4 MTPA to 45 MTPA. This is huge plan of investment but the execution will remain a critical question mark as the company has already been facing delays in some other projects. The scrip may see some momentum today.

As per Business Standard, as part of its service footprint expansion in the country, auto component maker Bosch has introduced a workshop concept in the two-wheeler segment. Announcing its foray into the two-wheeler service centres, Bosch Vice-President (Automotive Aftermarket) S Muralidharan said that the company has opened 10 Express Bike Service (EBS) outlets in the city on the lines of its sole outlet at Delhi. By opening more workshops, the company was confident of sustaining growth in the coming years. The company also plans to introduce mobile service and 24x7 service in a phased manner, Muralidharan said.

As per media reports, Reliance Industries will start supplying gas to the Bawana power project, thus easing power deficit in the national capital. Bawana is getting about 40-45 per cent of the 0.836 million standard cubic meters per day of gas. The power plant needs 2.8 MMSCMD of gas to generate 750 MW of electricity. It currently gets 1.564 MMSCMD from state-owned Oil and Natural Gas Corporation (ONGC). To meet the balance, the government had allocated 0.93 MMSCMD of gas from RIL’s KG-D6 fields for 2009-10 and 2010-11. But Pragati Power could not sign the Gas Sales and Purchase Agreement (GSPA) as the power plant was running behind schedule. We may see some positive moment in the scrip today.

As per news reports, Standard & Poor’s today lowered the credit rating outlook of Tata Power from ‘stable’ to ‘negative’, citing financial issues related to the company’s 4,000 MW Mundra ultra mega power project. The outlook revision reflects our expectation that Tata Power’s cash flow and financial risk profile could deteriorate over the next six to nine months because the company has breached a debt-to-equity ratio covenant on loans to its Mundra project. The stock was seen under pressure yesterday and will continue to remain under pressure today as well.

As per media reports, Ruchi Soya Industries Ltd (RSIL), India’s largest edible oil player, has signed a memorandum of understanding (MoU) with Thermax Ltd, a leading company in energy and environment solutions, to set up a one megawatt fluidised bed biomass gasification plant, laying the foundation for large-scale commercialisation of biomass power in the country. The proposed plant is set to come up at Ruchi’s Washim unit in Maharashtra. The scrip will see some positive momentum today.