Reduction In Exports Duty On Steel; Negligible Impact On Durable Companies: ICICI Securities
Considering strong return ratios, healthy growth potential, low penetration levels, we remain structurally positive on the sector.
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ICICI Securities Report
The Ministry of Finance has rolled back the export duties imposed on steel in May-22, to likely promote exports from India. Higher demand for steel products from International markets might shoot domestic steel prices upwards.
However, historical raw material cost analysis of durable players suggests very low (only 2-4% of net sales) exposure to steel. Thus, majority of durable players may sail smoothly, in case of any adverse movement in the prices of steel.
But it is important to note that close to ~10% of TTK Prestige Ltd.’s sales are from stainless steel cooker and cookware. Any adverse movement of steel prices might affect its profitability and premiumisation efforts in the near term.
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