SAIL sees strong momentum with gain of 7%; undervaluation against Tata Steel, JSW seen as key triggers

Metal index

Shares of SAIL climbed 7 percent on April 24, emerging as the top performer in the BSE Metal index for the day. At 2pm, the stock was trading at Rs 163.50 with 14 crore shares traded during the day. Traders said the stock was also bolstered by short-covering, apart from a favourable narrative building under its undervaluation compared to peers.

Purvesh Shelatkar, head of institutional broking at Monarch Networth Capital, attributes this rise to a global upturn in metal prices, driven by a robust demand outlook. He notes that iron ore prices have reached their highest level in over six weeks, buoyed by improved steel demand projections from China. Copper prices are also seeing a surge, contributing to the overall shine in the metal index. Shelatkar attributed SAIL's attractiveness due to its comparatively lower valuation.

Shelatkar further points out that SAIL's steel capacity matches that of Tata Steel and JSW Steel at 21 million tonnes, yet its market capitalisation stands at Rs 67,000 crore, significantly lower than the approximately Rs 2 lakh crore market capitalisation of Tata Steel and JSW. He attributes this deep discount in SAIL's valuation to its status as a PSU.

The SAIL stock has witnessed a price volume breakout, with trading volume spiking by over 2.91 times. Year-to-date, SAIL shares have surged by more than 31 percent. The Metal index, in which SAIL prominently features, has seen a robust growth of 14 percent, outperforming the Nifty, which has risen by approximately 3 percent.

The BSE Metal index has hit fresh life highs, registering a remarkable 2.65 percent increase, outpacing all other sectoral indices. Notably, all components of the BSE Metal index are in the green, with Tata Steel contributing significantly to the index gains. Tata Steel shares, up by 3 percent, are also marking fresh life highs.

This surge in SAIL's performance and the broader Metal index attests to the current buoyancy in the metal sector, driven by favorable global dynamics and robust demand projections.

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