@jitenp Sir do you see reversal of crude decline due to Saudi production cuts as a result of drone attacks? Or this will be just short term in nature?
Articles are saying that the attacks are sever and there is a huge impact on production.
You can look at historical PE or PB on www.ratestar.in and check how it has changed over the years.
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Telecom thesis seems to be playing out. As expected Jio has fired first salvo in raising prices. Watch for others. This is very good for the health of the sector.
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@jitenp sir are you still tracking Indo Amine looking lucrative at these levels. Are Amine prices increasing. How about Indo amine for playing chemical and Amine cycle
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https://www.alphainvesco.com/blog/equity-investment-steel-sector/
I request senior members throw some light on the steel cycle and industry. If the opportunity is there I think a discussion on the same is warranted 
@jitenp @hitesh2710
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Steel sector issues are mostly demand related and very tightly coupled with global scenarios.
Globally steel sector has below drag factor in demand,
i) Falling Auto sales in Europe & China
ii) Real estate boom in China going down.
iii) Brexit uncertainity
iv) Tradewar between US & China
Good thing on domestic front is, steel is the sector where IBC has been successfully used and there is a huge consolidation going on and is nearly done.
Below are my opinion :
i) Most of the steel sector issues are priced in already in downfall. But that doesnt mean it will recover or it will not go down further
ii) For steel prices to go up, it needs definitive triggers globally. Steel demand picking up within China will be huge driver but there is no visibility. Moreover, there are talks that there wont be any major producton cuts in China in winter months + nearly 31m tonnes new capacities coming online soon.
iii) With US election next year, Trump will look to sign a Phase I trade war deal (whether its good or not he is going to proclaim it a win for US). Regardless of the content of the deal, sentiment of a trade deal alone should help the sector. Same for a Brexit deal (with no impact for autos or steel)
iv) Possible risk which could drag down metals is any US recession
I have started to buy basket of steel stocks at lower levels, but only lower quantities. As & when, any positive trigger comes to market, I will add more. But if negative news comes in (say recession) will just hold positions.
I believe the whole turnaround may take 3 months to 2-3 years. So, for me this is long term play
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It’s tricky. Can’t predict how soon it will be. But it will. One must only accumulate slowly in this period, if at all planning to enter. I think CVs will be the last to recover unless their is a very attractive scrappage policy.
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Yes. I track Indo Amines. Today, we should get results. The management had indicated a slowdown earlier. One has to see if it is all priced in.
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Please refer to sugar industry thread, read discussion from August 2015 to 2016. You will find that this theory did not work as the period of boom cycle was very small to give any impact. Established players with good balance sheet were easily 6 to 10 baggers while debt ridden companies did not give any return. Some companies prices were two three times but people did not have chance to encash these as the period of rally was very short. Sometimes smartness does not work in market.
If you are sure that there is going to be a strong and sustainable rally in cement prices for significant time, this will work as debt ridden companies will go for multiple rerating if time permits. Normally weak players join late in rally when leaders of sector are too expensive to touch.
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I always play cement as a basket. There are 5 regions in India, and dynamics of each can be different. I believe cycle is favorable from a 2-3 year perspective, as mentioned earlier.
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Jiten bhai, What’s your view on north India cement demand scenario?
The region I like the most. CU in the region is quiet high compared to average. No big capacities also coming as compared to demand expectations.
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##Shree Cement Ltd is reportedly in an advanced stage of raising more than INR20bn (US$278.36m) through a qualified institutional placement (QIP) offering, according to the Mint.
“The money will be used for capex and debt reduction. They have been meeting investors for this purpose and are targeting to close this fundraise within this quarter,” said a source for the Mint. “They could raise anywhere between INR20-INR30bn depending on demand from investors.”
In October the company had announced plans to raise as much as INR30bn, in one or more tranches, through QIPs.
##HeidelbergCement is expecting to take both organic and inorganic routes to increase capacity to 20Mta from 12Mta in India, according to The Hindu.
“We are looking for cement companies with a capacity ranging from 5-10Mta,” said J N Cooper, managing director of HeidelbergCement’s Indian operations. “We are in talks with cement firms that do not want to get into the National Company Law Tribunal. But we are unable to give more details.”
Regarding pending projects, he said the company is awaiting approvals on a 3Mta project in Gujarat while another 5Mta plant in Kalburgi has been put on the backburner for the time being.
Elsewhere, an INR500m debottlenecking project is in progress at HeidelbergCement India Ltd’s plants, which is expected to increase capacity by 0.5Mta by 2021.
Zuari Cement, also part of HeidelbergCement, is constructing a 22MW waste heat recovery unit in Yerraguntla, Andhra Pradesh, at an investment of INR2bn (US$27.8m). Sitapuram Power Ltd, which owns a 43MW power plant, may also be merged with Zuari Cement.
What is this phase in cement cycle
Companies raising funds
Also looking to expand capacity
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Jk Lakshmi Cement results are quite positive and consistent since last 3 qtrs atleast significant ebit growth and debt reduction happening seems good candidate to add.
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@jitenp Jiten bhai,
Auto ancillary are now available at attractive valuations . is it the right time to buy quality auto ancillaries ? whats your view on auto cycles , has auto ancillary become less attractive than earlier due to shortening of the cycle or does it still have chances of a multibagger ? is the talk about disruption a good time to buy auto stocks ? Thanks
In auto ancillaries, the things to look are ?
- how much of their revenues are from CVs (as I think that space will struggle for some time, unless a very attractive scrappage policy)
- how much of the total revenues are immune to EV threat. For eg. a lighting company might be immune to EV threat, whereas a engine parts or a drive transmission company will be threatened. Within this how much is exports of the affected parts, as I believe adoption will be much higher abroad and India will be slower.
- Look at valuations. I believe affected companies will derate.
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Your 2nd point will override everything. Some companies will be expecting existential threats, unless they change product lines/do buy outs etc, which will not be easy
EV neutral product companies’s valuation will gradually go up…
Varroc is immune
Endurance too
EV will still need suspension n shock adsorbers
Ppap automotive into peripherals
Amara raja should keep doing well selling lead batteries to current e rickshaws
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