EFG Hermes upgrades Ezz Steel to buy

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CAIRO: EFG Hermes upgraded Ezz Steel Co , Egypt’s largest steel maker, to "buy" from "sell" on valuation, and said it views any fall in the share price from current levels as a good entry point to the stock.

Shares of Ezz Steel have fallen 36 percent since the Egyptian market resumed trading last week.

EFG analysts Ahmed Shams El Din and Rita Guindy cut their fair value estimate on Ezz Steel shares to LE 12.1 from LE 13.9, partly due to higher costs related to increased wages and employee benefits.

The analysts also expect a possible delay in Ezz Steel’s new direct reduced iron plant, which was originally scheduled to start operations in the second half of 2011.

The company may have to pay about LE 500 million for its plant license, EFG analysts said.

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