Hindustan Zinc, Hindalco, Tata Steel top picks: Prasad Baji

Prasad Baji of Edelweiss Securities told CNBC-TV18, "Our top picks are Hindustan Zinc, Hindalco Industries and Tata Steel. On Hindustan Zinc and Hindalco Industries, one common thing is that the non-ferrous pack will do better. Within Hindustan Zinc there is mine metal volume growth of 10-15 percent this year and next year also could be around 5-10 percent. So volume growth is certainly playing there. The long standing advantages of low cash cost, cash rich balance sheet are present."

"For Hindalco Industries, Novelis is a key driver we believe, which is independent of the aluminium prices, the margins being not linked to aluminium prices and they are also having significant volume growth. Over the next two years they will have 5.2 million tonne of capacity that they are adding, which will ramp up on 3 million tonne base," he added.
"In India, Hindalco Industries, the projects will not give meaningful contribution in the one-year perspective at the profit after tax (PAT) level but the projects having got completed, the risk has reduced substantially on the company and the projects. That will give a re-rating boost and besides, aluminium prices tend to benefit from the rupee depreciation that will anyway help."
"On Tata Steel, we will see the best volume growth in India from Tata and obviously they have the high margin because of captive resources in India. On the Europe side, the leading indicators are showing some kind of improvement. I don't think we will see a strong recovery but at least a modest improvement will mean that the drag that was there in the European operations will not be there as was there in the last couple of years. So that should help."