BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
Our outlook for metal stocks under coverage remains cautious to negative for CY22 – we continue to prefer downstream focused / converter models. Hindalco Industries Ltd. resonates because of its downstream focus and lack of upstream/smelting ambitions and so do APL Apollo Tubes Ltd and Jindal Stainless Ltd. (converter and serving in a niche downstream segment growing at a much faster pace than its steel counterparts).
The current margins, valuations clearly tell a story of caution. Deleveraging as a theme is important but overhyped given cyclicality.
Globally, higher return on equity is not leading to any rerating and we don’t expect Indian steel equities to be an exception. Anti-dumping duties on steel imports have not been renewed at a time when Chinese steel production and exports are expected to increase in Q1 CY22.
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