Erdemir Gains as BNP Says Buy on Steel Outlook: Istanbul Mover

Eregli Demir ve Celik Fabrikalari TAS climbed the most in more than a month after BNP Paribas SA raised Turkey’s biggest steelmaker to buy on bets a recovery in the price of the metal will boost sales this year.

Erdemir, as the company is known, gained for the first time in eight days, gaining 2.8 percent, the most since Jan. 14, to 2.23 liras at the close in Istanbul. The shares were raised from hold by Istanbul-based BNP analyst Alper Paksoy with a 12-month price estimate of 2.63 liras. The ISE National 100 Index advanced 1 percent.

Shares of the company, based in Zonguldak, Turkey, dropped 7.7 percent last week, the biggest weekly decrease since March, as Erdemir reported a 58 percent slump in 2012 profit to 424.2 million liras ($236 million), missing analysts’ estimates. Profitability is set to improve after flat steel prices advanced as much as 15 percent since November, Paksoy said.

“There’s likely to be ample support for Erdemir’s stock price” with the “partial but significant recovery” expected in the company’s Ebitda margin, a measure of operating profit, this year, Paksoy said in the e-mailed report.

The company’s profit will probably jump 67 percent this year, according to the average estimate of 18 analysts compiled by Bloomberg. Erdemir shares trade at 9.7 times estimated earnings, data compiled by Bloomberg show. That compares with 24 times for Egypt’s Ezz Steel and 5.8 times for Turkey’s Kardemir Karabuk Demir Celik Sanayi ve Ticaret AS, according to the data.