Prefer Hind Zinc to JSW Ispat: VK Sharma

VK Sharma of HDFC Securities feels that one can prefer Hindustan Zinc to JSW Ispat Steel.

Sharma told CNBC-TV18, “I think as far as the shareholders of JSW Ispat are concerned they are wedded to JSW so for that instance or for whether irrespective of what share you hold you need to get out of this arrangement. Currently to give a perspective on the merger I think it is EPS dilutive also it will increase the debt of the company although it will make it a larger company. It will raise the capacity from 11 million tons to something like 14.3 million tons but it nevertheless was the largest and it will make it further large.”
He further added, “I think it quotes at 9x PE and if one were to move away from a steel company I think moving to a same metal company but in the zinc space although it is still related to steel because you need zinc for galvanizing but there you don’t have the disadvantage of dumping by China. So, to that extent I think Hindusthan Zinc which is available at a 9x PE is an obvious rich from JSW Ispat or JSW Steel to Hindusthan Zinc.”