BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
IDBI Capital Report
Covid-19 is likely to lower India’s domestic steel demand by 18% YoY in FY21E.
Despite this, we expect flattish to modest volume growth for large steel players as Indian steel companies are resorting to exports (even at lower margin) to offset the weak domestic demand.
Steel prices have improved since July 2020 and we expect these prices to sustain and rise further in FY22E.
Better realization and improved demand is likely to result in higher margins for large steel companies in FY22E.
Most of the companies have announced capex cuts and plans to prune operating costs.
Large steel companies are better placed in the current weak cycle, compared to previous weak cycle (2015-16) as their balance sheets are relatively stronger.
We expect large steel companies to gain market share from the small and non-integrated players who are likely to struggle due to high debt, weak steel cycle, labour shortage, etc.
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