what are the triggers to keep a track on to see if the cycle is turning negative … and hence gauge how much steam is still left .
Hi Varun, not sure if you are asking me, but view is as follows. Either one can do detailed demand supply models to forecast when the dynamics turn unfavourable and would require access to lots of paid data. Or go the simple way which most retail can do, which is follow the P/B chart and exit when it is nearing old peaks. If one wants to be even more scientific, one can give 6x EV/EBITDA on normalised earnings. Now use the net debt number you think is most likely 1year forward to calculate mkt cap. If market cap u get is lower than current market cap SELL.
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Sorry - was meant for u only 
. @Rakesh_Arora
Does this rationale hold true for all commodity plays or just a few .
Also - how should we estimate ebitda given prices fluctuate a lot . Am presuming prices for steel won’t come off much this year given the current circumstances but that’s a broad guess
Goldman Sachs has come up with the report on Copper. They have predicted the prices to steadily increase year on year until 2025 to reach $15,000/Ton(current about $9,000). They attribute it to EVs, Green Energy initiatives across the world.
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Oxygen from Steel plants being diverted for medical reasons
@Rakesh_Arora - Which players are likely to be affected more. I am particularly seen to know the impact on Godawari’s products
Steel_Oxy.pdf (47.4 KB)
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Godawari has no impact. BOF is largely used for flat products, while Godawari’s products are pellets (largely exported) and long steel products
Largely yes. Take last 5year average for sustainable EBITDA and make adjustment for any change in competitive positioning of the company like Indian iron ore prices have moved up sustainably by Rs1000-1500/t due to Auctions in Mar’20
Btw one can check current prices of iron ore/steel and read stories from SteelMint free here GIA Stocks
Sir
Can you share the link of website where to get this kind of chart ?
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this is from my research which is available on my website www.goindiastocks.com. While you can look at both these parameters separately in chart on this website but not together. But you have given me good idea. Will introduce this capability to compare any parameters of the same company
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Came across the news item - https://www.washingtonpost.com/climate-environment/2021/04/20/biden-climate-change/
US is targeting to halve emissions by 2030!
Just wondering what it means for a certain commodities and cyclical plays. Does it give rise to a huge opportunity to certain companies?
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Ambuja Cement has announced increasing capacity from 29.65Mnt to 50Mnt. The first plant of 4.5mnt capacity is to be commissioned next quarter. This is coming on back of 10years of losses in market share. There is potential merger with ACC also in cards as one of the hurdles has been removed in the recently announced MMDR Act 2021. Can it re-rate now?
Source: Dreams are back...
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For a small investor NCL industries is also a good bet. There is a branded business of Bison Board also in the same company which is worth a lot, along with 2.7 MT cement capacity. Total EV is approx 1000 cr with WHRS capex already done and benefits of 25 cr plus annually which will add to the already strong bottomline. Some good investors have taken a sizeable position of late along with the promoter stake also increasing. If we value the Bison board business at 200 cr, we are getting a 2.7 MT well run cement company at 800 Cr which is approx 40 $ / MT
Will really appreciate to hear your view on this one
Good disclosures and dividend policy also - so better times ahead for next few years . Do check their last quarter business update to get more details
disc: invested
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@Rakesh_Arora sir, what is your view on the impact of the new Covid restrictions on paper companies? especially with respect to the comopanies using recycled paper as a major source of raw material.
My theses: Seems like schools will be shut for another six months at least, so writing and printing paper demand should take a hit. Also supply of raw material should be limited thereby increasing input costs. Seems like this is largely factored in share rices too. Is this a correct understanding?
Sorry not an expert on paper. but the other impact to consider is rise of e-commerce and food deliveries. All use paper
Hello everyone, another news on steel prices :
This article also mentions that aluminum and copper are also reaching all time high of last supercycle. Can this mean aluminum/copper companies are going to have good time just like steel companies ?
Stay safe & healthy
- Karan
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@Rakesh_Arora do u have a pref for a metal / mining play - steel , alum , copper or a combination ( Vedanta ) ?
Sorry to butt in
You might like to look at Aluflouride
Dear all,
Another question,
On the Rain Industries thread it can be clearly seen that aluminum cycle has turned (as is clear from many articles on the web), but we have not seen a run up like steel for the aluminum companies, so any thoughts on this ?
- Karan