Metals, Mining Sector Update - Duty Relief, A Respite, But Not A Bloom: ICICI Securities

ICICI Securities Report

We believe the Government of India’s decision to roll back the duties imposed on ferrous and stainless steel products in May-22 is a welcome step.

However, due to the falling steel demand and low prices, globally, the benefits are likely to be marginal. Key points:

1. exports margin/volume is likely to improve;

2. domestic price hikes may remain muted in view of adverse import parity;

3. margins across secondary steel chain may improve, resulting in iron ore prices bottoming out; and

4. stainless steel players are likely to benefit.

Overall, while domestic steel prices are unlikely to increase substantially, we believe a significant sector headwind has been removed. That said, the street would be wary of the likely imposition of duties in future, if prices are sharply up.

We perceive the event to be a sector re-rating, and hence, raise the valuation multiples of all ferrous stocks under our coverage by 10%- corresponding to similar profitability level, as pre-export duty.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.