AlembicHC upgraded Ezz Steel, Egypt's largest steel maker, to "overweight" from "underweight," and said it does not expect allegations against the company's chairman over the acquisition of state-owned Ezz Dekeila Steel to affect minority shareholders.

Ahmed Ezz, who was a top official in ousted president Hosni Mubarak's party, was accused of illegally taking control of Al-Dekheila Steel, which booked heavy losses as it supplied Ezz with steel at reduced prices.

"Allegations pertaining to Ezz Dekeila Steel acquisition are a risk but we believe any negative outcome would be specific to Ahmed Ezz and is unlikely to harm minorities," the brokerage said.

The brokerage said even if Ezz Steel spun off its Ezz Dekeila Steel unit, financial authorities would ensure that minorities were compensated in cash and/or Ezz Dekeila Steel shares.

AlembicHC, which maintained its price target of LE14.8 Egyptian pounds on Ezz Steel shares, noted that the company's shares have plunged 33 per cent since the Egyptian stock market resumed trading in late March.

Ezz Steel shares were trading down nearly 1 per cent at 10.40 by 1103 EET on Monday.