Metals stocks: Nischal Maheshwari selects the main commodities stocks on this market

“You’re going to see EBITDA per tonne for most of these ferrous bets lower than expected,” says Nischal Maheshwari, CEO Institutional Equities, Central brokerage.

In the recent past, you’ve seen aluminum and nickel prices go up a bit. How to play this merchant theme? How do you play the metal pack as a whole?

You must be prudent. You have to be really nimble when playing metals now. That said, we remain positive, particularly on the ferrous side. The latest is essentially about exiting China and increasing the allocation to the infrastructure side and easing interest rates. This actually set the metal pack on fire once again. At home, I think this quarter is going to be difficult for each of them because they will not be able to pass on the costs – in particular on the increase in coal. So you’re going to see EBITDA per ton for most of these ferrous bets fundamentally lower than expected. I think the market is already expecting it. This is going to subside in terms of results. So you have to be careful here. But a 10-15% rise from here on the ferrous pack is visible. Our first choice remains the JSPL and in that order. In the case of aluminum, it’s a slightly different story. Basically there is very strong demand – especially from the CAN industry as well as the automotive industry and there we are positive on Hindalco.

In the longer term, if you extrapolate copper, what should happen on the renewable energy side? Is there a game to play on the copper side as well and can Indian players really benefit from it?
You must understand that there is no copper ore in the country. What most guys basically do with Sterlite is they actually buy the merchandise and then convert it. So we are basically a converter and we are deferred in that way. We are essentially price takers on copper in the country. It is mostly imported. Whereas in the case of iron ore and aluminum, we have the land and that’s where we can manufacture a lot. So copper, yeah, I think it might be a long-term game, but not much as far as India is concerned.

What’s your take on the big IT numbers this week?

A standout among the three companies is Infosys. A good set of numbers. For several years I don’t recall Infosys providing this type of data or any of the large cap IT companies providing this type of numbers. TCS, yes I think a little disappointed so I think the buyout does the trick there.

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