Essar Steel to bid goodbye to public

Essar Steel is planning to delist the company from the bourses. This was expected for some time. The promoters own about 87% of the equity. They need to own at least 90% of the equity before they can delist. Thus, they are looking at a 3% share in order to delist the company.

The entire process will start on September 24, when the reverse book building process will start, the bids will come out and the discovered price will be determined, on which basis the shares will be bought back.

Analysts said that the steel industry is looking very buoyant at this point and steel prices are on their way up. Global prices are looking up. Raw material pressures are there, which may cause the prices to go up even more. They expect steel prices to remain buoyant over the course of the year.

A lot of brokerages have been bullish on the steel sector, added analysts. On a valuation basis, Essar Steel is around 10 times FY07 earnings and a little expensive on that basis. Essar Steel's EV per tonne is around 1,800, EBITDA is around four times and it is looking at a price of Rs 43.

Most of the analysts are not expecting the offer to go through. Essar is looking at delisting its group companies- Essar Oil and Essar Shipping . Essar Shipping's offer opened up in March, but did not go through as they did not get enough shares. So, it will have to be seen if the Essar Steel delisting offer will go the Essar Shipping way.