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MOSL: Morning India (30/November/18): 1. Metals (Steel price volatility to eventually seep into India); 2. The Corner Office — Britannia Industries; 3. EcoScope (Why high real interest rates could continue in I

MOrning India (30/November/18): 1. Metals (Steel price volatility to eventually seep into India); 2. The Corner Office — Britannia Industries (Growth momentum accelerating); 3. EcoScope (Why high real interest rates could continue in India); 4. Financials – NBFC; 5. Consumer

 

Today’s top research theme

Metals: Steel price volatility to eventually seep into India; Prefer JSW Steel for superior returns; Sell on Tata Steel

• Steel price volatility in the global markets triggered by the supply glut in China should eventually seep into the Indian steel market. Imports of HRC are about INR3,000/t cheaper than the current domestic prices.
• Focus of Chinese mills appears to be shifting from high productivity to protecting profits, and therefore, we believe that the earlier supernormal steel mill spreads are a thing of the past. Hence, we are lowering estimates for all steel companies.
• Valuations of steel stocks are getting de-rated globally, similar to events seen during 2008 i.e. before the financial crisis.
• We are downgrading Tata Steel to Sell and recommend switching to JSW Steel for superior returns.

Piping hot news

Rupee soars 77 paise, breaches 70/USD mark after 3 months

• The rupee vaulted 77 paise to a three-month high of 69.85 per U.S. dollar on Thursday, propelled by easing crude oil prices and fresh foreign capital inflows. In a major relief to energy importers like India, oil prices slipped below the USD 60 per dollar mark as investors fretted over a supply glut.