Any idea why JSPL didn’t benefit from the high coking coal prices? Don’t they get nearly 60% coking coal from captive sources?
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Their Australian coking coal mines are only starting now. Let’s see what they say on conf call.
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This is a lovely interaction with Kenneth Andrade where he explains the capital cycle theory with Indian examples. The cleanest presentation I have seen on this topic, a must watch.
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Hi everyone, wanted to discuss a query on Jindal stainless. Nickel prices have shot up massively in the past few days. According to the latest filings, Jindal stainless maintained an inventory of 3767 crs. against sales of 5027 crs. for the quarter ended September 2021. This comes out to be nearly 75% of quarterly inventory. And in this time period JSL hasn’t moved much. Is this a good way of benefitting from a significant inventory gain due to Nickle? or is my assumption wrong?
Usually there will be some pre-booked orders also against this inventory. So the inventory gains may be limited. And in medium term it doesn’t matter as those gains will be lost when nickel prices comes down. In fact with sharp increases in Nickel prices, demand might crash.
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GMDC management talk
Interesting points
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Cash deposit with NBFC earning better ROI and this cash will be used as and when required for capex.
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Already 5 operational blocks and new 6 blocks will be operational in next 1 year
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EV study and R&D underway and shortly it will be known.
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Lignite is substitute for coal and due to higher coal prices the lignite prices are expected to go up.
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Margin will be maintained at 28% +
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Other projects are in implementation stage along with companies like Navin Florine etc ( details on website available)
Hope all things turning out to be positive.
Disc. Invested
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@jitenp Sir is the papers stocks are on fire ?
West Coast Papers :
FA 4 QTRS increased Sale ;Margins improvement; Cyclic movement of sector
TA : Dbl bottom , Weekly candle break out from 50 SMA upwards ,MF are in buying positions ;Relative strength to nifty 50
Seshapaper
FA : 4 QTRS increased Sale ;Margins improvement; Cyclic movement of sector
TA : Dbl bottom , Weekly candle break out from 50 SMA upwards ,MF are in buying positions ;Relative strength to nifty 33
dis : invested may be biased
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Can anyone shed light on the capacity utilization by the steel industry?
A few like Arcelor-Mittal and Tata Steel have issued orders for new equipment, so one presumes the bigger companies foresee a shortage of capacity.
But what about the rest? And if we are on the verge of a capex boom from the steel sector, who could be the beneficiaries?
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Very well explained: Paper sector recent performance is driven by
a) Demand normalisation (due to schools reopening),
b) Distribution channel restocking (due to inflationary concerns and strong demand),
c) Price hikes driven by raw material shortage of waste paper used to manufacture recycled paper - In Oct 2021, EU has banned exports of waste paper due to the shortage arising during the last 2 years due to pandemic and increasing use of digitisation. Price hikes are by both Grade A paper mills (integrated pulp and paper producers - JK Paper, Andhra Paper etc) / AND Grade B&C paper mills (60-65% of production output and depend on expensive waste paper and agro residue as raw materials)
Further paper price hikes expected in near term ie next few months
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Check out the blog on paper -
https://www.multipie.co/blog/multipie-weekly/paper-gains-are-real-not-just-on-paper-this-time-📰💰/
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Just adding some views on this + scuttlebutt on this from a paper buyer:-
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Paper prices have seen a significant price hike in the last month, and there is still a supply shortfall. This includes Grade A mills.
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Production for writing paper and printing paper (notebooks and office stationary) is seeing strong demand despite the increase in RM prices. This already started with strong production demand in Q4 21-22 and could continue higher in Q1 2022 in case things remain on track with reopening of schools, colleges and offices in full stead
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Base year is very low giving scope for significant growth with upcoming demand + price hikes.
Just taking an example of Seshayee Paper:-
Currently trading at 1 Price to Book. Net profit in the last ‘normal year’ (with lower prices than current) was 190 Cr in FY 2019. At a market cap of 1190 Cr, this means it is quoting at a PE of ~6.2 on normalised earnings, vs median 10 year PE of 10 and 5 year PE of > 8. This is despite almost being debt free with growth visibility + a company which has very high exposure to writing and printing paper.
There is also insider buying happening in the stock, latest in March’22 (buying by promoter N Gopalaratnam and Promoter entity Time Square Investments Private Limited)
- Above posts have already discussed the European ban on waste paper as well as demand scenarios affecting prices
Disclosure : I am invested in Seshayee Paper and biased. I am not a SEBI advisor and this is not investment advice
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Steel prices increased. Who is the gainer of this - Iron Ore producer, Coal Producer or Steel companies themselves @Rakesh_Arora - will appreciate your insights please
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Coking coal is eating away the margins and is forcing steel companies to take price hikes. The key beneficiaries are
- Companies with coking coal integration, here Tata Steel (20%) and JSPL (40%) captive benefit the most
- Steel prices in Europe has jumped up much ahead of domestic prices. Here Tata Steel, followed by JSW benefit. JSPL is also trying to export more
- Iron ore prices are seeing an upswing because of increased demand from Rest of the world in view of 30mnt steel exports being disrupted from Russia/Ukraine. GPIL and NMDC key beneficiary
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Thanks Rakesh!
How much percent of iron ores fulfilled captively for Tata Steel, JSPL and JSW ?
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Tata Steel 100%, JSPL 20% and JSW Steel NIL. This is based on where they pay old royalty rates. JSPL and JSW have taken iron ore mines at higher royalty rates which doesn’t save them any money over market rate
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As per this article, if cotton prices are trending higher then the textile mills which are able to pass on cost pressure will benefit. Isn’t it ?
Whenever global commodity prices rise, the Indian firms automatically becomes competitive as they also get pricing power (like this happened recently in paper companies). Please correct me if I am wrong.
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Tried to calculate the implied EBITDA per ton for metal companies based on current EV. And compared it with what companies achieved in last 5yrs average and in Q3FY22. Interesting results.
Source: After the stratospheric rise...
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Cement prices tend to move up in step ups. We have seen 3jumps in last 20years. And given the current sharp cost push of almost Rs60-65/bag, cement prices should see increase of Rs40-50/bag pre monsoon. Cement prices stick while current cost increases are temporary with war premium built in them. Strong margin expansion possible ahead.
Source: Bullish on cost pressures...
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