The street underestimates demand for steel. Coupled with capacity constraints, that would help steelmakers report stable earnings in FY22 and prompt an upgrade for FY23, according to commodities market veteran Rakesh Arora.
China is still the biggest determining factor but people shouldn't read too much into demand for industrial metals originating from the U.S. stimulus plan, the managing partner at Go India Advisors told Niraj Shah on BloombergQuint's BQ Edge event.
According to Arora, retail investors should closely track the price/book valuations of steel companies as calculating other metrics might pose a challenge.
Among other commodities, he said, there's still “some juice left” in the cycle of aluminium.
On what to bet on, he said the market is at that stage of the cycle when the best company may not necessarily give the best return. “PSU stocks of leaders in steel and aluminium may not be bad bets.”
Watch the full interview with Rakesh Arora here:
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