Metal and Mining share price target

During Q3FY21, there was a sequential improvement in base metal prices. During the quarter, average zinc prices on the LME were at US$2628/tonne, up 12% QoQ & 10% YoY while average lead prices were at US$1902/tonne, up 2% QoQ, albeit down 7% YoY. Similarly, average aluminium prices on LME were at US$1917/tonne, up 12% QoQ, 9% YoY while average copper prices on the LME were at US$7178/tonne, up 10% QoQ and 22% YoY. Movement of base metal prices on LME...

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QoQ/60% YoY. Steel realisations are expected to fall Rs3500/t QoQ due to higher share of exports at 60% v/s 15% QoQ/YoY. While, strong push in exports helped contain the fall in overall volumes to 25% QoQ/23% YoY at 9.6mnt. Hit by lower realisations and volumes, EBITDA/t would likely to fall by 38% QoQ/47% YoY at Rs4,970. However, we expect JSP to post strong set of earnings than its peers, led by iron ore inventory benefit and better volumes. Maintain Underweight on sector; Reiterate BUY on JSP and HNDL: Stocks moved up ~30-35% over last couple of months in light of improvement in global...

QoQ/60% YoY. Steel realisations are expected to fall Rs3500/t QoQ due to higher share of exports at 60% v/s 15% QoQ/YoY. While, strong push in exports helped contain the fall in overall volumes to 25% QoQ/23% YoY at 9.6mnt. Hit by lower realisations and volumes, EBITDA/t would likely to fall by 38% QoQ/47% YoY at Rs4,970. However, we expect JSP to post strong set of earnings than its peers, led by iron ore inventory benefit and better volumes. Maintain Underweight on sector; Reiterate BUY on JSP and HNDL: Stocks moved up ~30-35% over last couple of months in light of improvement in global...

Muted metal prices to impact aggregate operating margin We expect the aggregate topline of coverage companies to decline 19.1% YoY. On the back of a weakness in metal prices, in general, YoY, the aggregate EBITDA is expected to decline 35.9%YoY. The EBITDA/tonne of domestic miners in Coal India is likely to come in at | 391/tonne with NMDC expected to report the same at | 2138/tonne. We expect Novelis (Hindalco's...

There's hope after gloom. After a tough CY19, we perceive initial signs of recovery in the global steel industry.

The domestic steel sector witnessed challenging Q2 with demand growth slipping to 1.7% YoY in August 2019 compared to 6.4% YoY in April 2019. This, coupled with a sharp fall in steel prices due to trade war resulted in INR 3500 INR 3800/t impacting profitability for all major companies in Q2. Consequently, raw material prices Coal India have also fallen sharply, but the benefit would flow in Q3FY20E onwards. We expect blended steel realizations to be lower by INR 3500-3800/t while aluminium/copper average LME were lower by 2%/12%/5% YoY. We Hindalco believe owing to monsoons, steel sector sector seasonally have weaker Q2 demand and 2HFY20 is expected to be better than 1HFY20 from pickup in infrastructure activities. Metals overall would witness worse performance in this quarter, causing EBITDA to fall by 34.7% QoQ and 43.4% YoY. Going forward, the outcome of US- Moil...

Kamlesh Bagmar | kamleshbagmar@plindia.com | +91-22-6632 2237 Amit Khimesra | amitkhimesra@plindia.com | +91-22-6632 2244 Prabhudas Lilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision....