Commodity and Cyclical Plays


(malayruparel) #288

India’s steel demand potential…


([email protected]) #289

Since there isn’t a board for Hind Copper, am posting this here. Kendadih mine is re-opened and this would add 2.25 lakh MT capacity. This mine has been closed since 2000 apparently and the favourable economic conditions have made the company re-open this mine.

http://www.bseindia.com/xml-data/corpfiling/AttachLive/e03ac425-c7fe-4a4b-b23a-c141b7e0b3fe.pdf


(malayruparel) #290

I am reading “Value Investing and Behaviour Finance” by Parag Parikh and found chapter on Commodity Investing very interesting and relevant. Points which I like to highlight:

  1. The Paradox: Conventional thinking does not hold true
    When one is looking at returns to be made from investing in a commodity stock, the conventional wisdom of investing on sound financial parameters does not hold true.
  2. Efficient and low cost producers are least benefited during upcycle and high-cost producers and heavy debt companies will be able to give higher returns to investors. Reasons for this are:
    • Low-Base Effect
    • Debt reduction and decline in interest burden
    • Re-rating
    • Lower taxes because of the loss in down cycles.

Author has tested above principle with share price comparison of Steel and Cement companies during 2003 to 2006 cycles

I would suggest to read this book especially chapter on Commodity Investing


(Jiten Parmar) #291

Very relevant points. Haven’t read the book, but that is also my exact
inference.


(rockstarinvestor) #292

Goldman Sachs is Extremely Bullish on certain Commodities including Copper in times to come…


(Jiten Parmar) #293

Good to see Godawari Power doing very well. Largest position in my metals basket. Stock has tripled from initial buy.


(blueeyedinvestor) #294

What is so great about GPIL Jiten. If you can elaborate please as u must know about it thoroughly since it is the largest exposure for u in the metal space.


(vaibhav) #295

@jitenp which stocks do you like in textile sector?


(Jiten Parmar) #296

One can have a look at ICIL, Sintex Ind.


(Yogesh Sane) #297

@jitenp are you tracking Beekay Steel? Just reported a 200% jump in profits on 25% jump in sales. Trying to figure out how long will this cycle last. Company is a manufacturer of Sections, Bright Bars, Structurals, TMT Bars, Coil Springs etc.


(rockstarinvestor) #298

(Jose) #299

Since cotton prices are expected to trade higher,won’t that hurt the margin of textiles further


(vishwa7000) #300

HI, Jiten,
Are you tracking Asahpura Minechem, Bentonite Major in india. What is your view on medium term.
Disclosure: No holding


(Mehnazfatima) #301

Ashapura is extremely bullish on long term charts…something is going on there


(Mehnazfatima) #302

(vishwa7000) #303

Ashapura minechem , One of the Promotor sold 10% and Porinju’s equity intel baught 5%. Quite confusing signal. Really no idea for business tailwind, upcycle, seeking help from the VPmembers
Disclosure : Not invested


(Jiten Parmar) #304

There is a long story in Ashapura Minechem. Fizzah Navnitlal Shah is tbe one who has sold. There was a big fight between Chetan Shah (son) and Fizzah (stepmother). That’s actually very good news for the stock. Do understand that there is a big contingent liability in Ashapura books. I think in future we will see one big loss number.

Disc : Invested.


(Jiten Parmar) #305

not tracking Beekay Steel. Planning to have a look at it.


(Jiten Parmar) #306

yes. that’s a short term negative for them (reflected in stock prices). And, as I mentioned it’s a contra play. Will add to these over time, when I see cycle turn around.


(Jiten Parmar) #307

It’s a turnaround deleveraging story. Which has played out beautifully.