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Shares of metal companies are trading lower by up to 5%, extending their previous day’s fall, after the Supreme Court cancelled all coal block allocations except for government-run blocks that operate on a non-JV basis.
The government has cancelled coal blocks for companies like Jindal Steel and Power (JSPL), Hindalco, Usha Martin, Sarda Energy, Jayaswal Neco Industries, Monnet Ispat & Energy, GMR Infrastructure, Prakash Industries etc. which would be negatively impacted.
Among the individual stocks, Prakash Industries, the largest loser among the pack, has dipped 11% to Rs 54.40 on BSE. The stock touched a low of Rs 50.10 in intra-day trade.
Usha Martin too plunged nearly 10% to Rs 27.20, followed by Monnet Ispat & Energy (8% at Rs 81.70), Jayaswal Neco Industries (6% at Rs 13), JSPL (5% at Rs 181) and Hindalco Industries (2% at Rs 153).
According to CRISIL Research, “players who have operational coal blocks will witness a sharp decline in profitability post 2014-15, as they would have to substitute captive coal with imported coal which is about four times more expensive.”
In 2015-16, impacted players in the sponge iron and aluminum sectors are expected to witness a 900-1,000 bps and 300-400 bps decline, respectively, in operating profitability, said rating agency in report.
The government has cancelled coal blocks for companies like Jindal Steel and Power (JSPL), Hindalco, Usha Martin, Sarda Energy, Jayaswal Neco Industries, Monnet Ispat & Energy, GMR Infrastructure, Prakash Industries etc. which would be negatively impacted.
Among the individual stocks, Prakash Industries, the largest loser among the pack, has dipped 11% to Rs 54.40 on BSE. The stock touched a low of Rs 50.10 in intra-day trade.
Usha Martin too plunged nearly 10% to Rs 27.20, followed by Monnet Ispat & Energy (8% at Rs 81.70), Jayaswal Neco Industries (6% at Rs 13), JSPL (5% at Rs 181) and Hindalco Industries (2% at Rs 153).
According to CRISIL Research, “players who have operational coal blocks will witness a sharp decline in profitability post 2014-15, as they would have to substitute captive coal with imported coal which is about four times more expensive.”
In 2015-16, impacted players in the sponge iron and aluminum sectors are expected to witness a 900-1,000 bps and 300-400 bps decline, respectively, in operating profitability, said rating agency in report.
