I had bought SAL Steel so I came to know about Shah Alloys Ltd ( First Letters = SAL ) . Sal Steel was loss making in last 2 years , while Shah Alloys was profit making . Now this year SAL Steel is a turnaround story making profits while Shah Alloys is going heavier and deeper in losses ( first quarter loss = 22 Crores , second quarter loss = 98 Crores !).
Can you see a coincidence ?
This is the world of Indian Business !
Some people are of the opinion that Shah Alloys has closed down . On Moneycontrol.com , messages board , someone has posted that he has insider information that the plant has shut down due to some technical problems . However I do not think so , bacause logically , the sales are continuing i.e. nearly Rs.200 Crores each have been reported for june & September quarters . Of course there is a possibility that due to some reason the working of the plant may have been temporarily affected , for some time .
But there is no doubt that with the recurring losses - increasing every quarter - I see very little possibility of the year 2007-08 ending in profits , and this will not justify the price presently being quoted for a profit making Company . Specially when there seems little hope of getting any Dividend for this year .
Hence I am of the opinion that the trend of the Share prices of this scrip is downwards and I would not be surprised if after the third quarter results - if they also come negative - the share prices drop sharply to below even Rs.25/- .
I feel that it would be better to book losses , and re-enter after the Company once again gives more positive signals for the Net Profit .
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