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Monday, September 7, 2009

Lloyds Steel - Stock Analysis & Recommendation

One of my reader asked me if he can buy Lloyds steel at current level as he heard of a news that steel prices are going to increase in the month of September. So does this news makes Lloyds steel a stock to buy?

Lloyds steel has been continuously a loss making company.

Reported net profit:
Mar 05: 122 Cr
Mar 06: -63 Cr
Mar 07: -68 Cr
Mar 08: -48.5 Cr
Mar 09: -165 Cr

This company has turned from profit making company into a loss making company. With meagre steel price hike you can not expect good price appreciation in stock price. Would you be like to part of a loss making company which is making losses for past 4 years in a row? That too when other steel making companies are making profits.

For past 5 years this stock has been moving in the range of 10 to 20 with two exceptional spikes of reaching it to Rs.30.

Lloyds Steel - Stock Analysis & Recommendation
The move you are witnessing currently is just a trading move which is moving this stock along with other steel sector stocks. This might move another 5 - 10% ... maye uptop Rs. 12 max. But I would not recommend you to buy Lloyds steel unless you find some strong fundamental signal. It could be a stock to buy only if it shows some fundamental change like reducing losses and ultimately making profits, which looks unlikely in near times.

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