Kalyani Steel zooms up as ban lifts

Kalyani Steel zoomed up to Rs.43.25, after having opened the day at Rs.37.55. The stock remains now in the green, up 16%. Volumes have also shot up to almost 3 lakh shares.

The stock reacted with this sudden surge the moment the news came in that the Supreme court has lifted the ban on Category B mines in Karnataka. 63 mines will now reopen in this category but the Supreme Court cancelled all mining leases in Category C.

This is great news for companies like Kalyani Steel, Sesa Goa, Sandur Manganese. But it will take a while for the mines to become operational, maybe 18-24 months as companies will have to get approvals to restart the mines and will also have to put a R&R plan in place. They will have to get all the clearances – including forest, environment and the rest, Thus the full advantage will be felt only in FY15.

Kalyani Steel in Fy13 operated at 40-50% capacity but it is expected to ramp it up to 70-75% capacity in Fy14 and once the mines start operating, which could either be end of Fy14 or early Fy15, the company could get to 100% capacity. Thus material benefits to companies will come in only after 15-18 months post this Supreme Court order today.