ICICI Securities: Metals Sector - Spectacular Rally Worsens Risk Reward
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ICICI Securities Report
Metal Sector has seen a remarkable rally since the Covid-19 induced correction, witnessing average recovery of approximately 60-200%, all in four months.
What was re-experienced though is the resilience of asset valuation framework (notably price to book) in calling out sector bottom.
Most stocks bottomed out between 0.35-0.45 times P/B (barring the cash-rich miners like NMDC Ltd. and Hindustan Zinc Ltd.).
Chinese demand led the recovery, amidst familiar signs of disbelief from market participants. Characteristic signs of catching up are visible across sector names.
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