In an interview to CNBC-TV18, Varun Lohchab, MD & Co-Head of Research, Religare Capital Markets said that from result perspective, it will not be a great quarter especially for the steel companies.
All the listed companies will declare their results for the quarter ended December 31, 2012 in January.
In an interview to CNBC-TV18, Varun Lohchab, managing director and co-head of research, Religare Capital Markets said that from the result perspective, it will not be a great quarter for the steel companies. "Q3 might be weak for JSW Steel and Tata Steel and even Steel Authority of India (SAIL) to some extent. We believe market will look through that because Q4 should be a better quarter," he added.
He believed that Q3 will be the worst quarter from realisations perspective. "At that time one will see quarter-on-quarter decline, especially in the steel space. There will be some uptick in domestic steel prices from Q4," he asserted
Below is the edited transcript of his interview to CNBC-TV18.
Q: The result season is impending, which number would you track very closely something that will really lend direction to the stock? Which one are you backing at this point in terms of stock performance?
A: From result perspective we don't think it will be a great quarter especially for the steel companies. The domestic realizations were under pressure in this quarter. Even the production numbers from some of the companies are going to be lackluster.
However, we believe that Q3 will be the worst quarter from realizations perspective. Starting Q4 one will see some up tick in domestic steel prices. So, the stocks which we continue to like in the metal space are Tata Steel among the steel pack and Sterlite Industries and Hindustan Zinc in the nonferrous pack. We also like National Mineral Development Corporation (NMDC) .
Q: In terms of results do you think that there will be major disappointments in Q3 from any quarter?
A: We don’t think there will be major disappointments but one will see quarter on quarter decline especially in the steel space. So, if you look at Tata Steel for example we believe that domestic realizations will be down on quarter on quarter basis. The volumes will be up and Corus will again be weak on quarter on quarter basis. So, Tata Steel will be a disappointment. JSW Steel could disappoint because their production volumes have been under pressure.
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