In Past 1 year various Commodities & Chemicals have spiked & fired up quite a few stocks 🔥
Let’s look at how the stocks have performed vs the commodity / chemical price move from May 2020 - May 2021 🚀
Listing down a few points on each in the below thread 👇
Steel +80%
JSPL +303%
Tata Steel +300%
JSW Steel +334%
SAIL +340%
✔️Strong Chinese demand & focus on reduction in carbon emissions.
✔️Domestic Steel prices still at a 15% discount vs imported
✔️Top 5 Cos increased market share
✔️Cos continue to deleverage their balance sheets
Gold 12%
Muthoot Finance & Manappuram Finance +50%
✔️Increased loan book growth as they lend more & get operating leverage
✔️Reduced auctions of pledged Gold = less NPAs
✔️RBI relaxed LTV for gold financiers to 90% from 75% = level playing field for Banks & NBFCs
Silver & Zinc +50%
Lead +35%
Hindustan Zinc +120% [only silver play in 🇮🇳]
✔️Silver contribution EBITDA likely to hold above 25% vs historic 15% to 20%
✔️Silver gets a higher multiple (10x EV/EBITDA) vs Zinc-Lead (7x EV/EBITDA)
✔️Healthy cash balance & solid dividend paying
Copper +80%
Hindustan Copper +700%
✔️Only direct beneficiary of rising Copper prices
✔️Hindalco & Vedanta exposure is limited to ‘TcRc margins’
👉TcRc: Treatment Charge and Refining Charge
👉Need to note that: GOI + LIC + Institutions hold 90% in co so float is limited
