News Analysis

Investors need to be cautious, though, given the run-up in the stock price as well as valuation

Listing day gains are unsustainable

Broader business momentum offset Q1 miss

The stock is now trading in line with valuation of peers

Promoter compensation may be reined in; however, current valuation is unsustainable

Effect of dollar mop-up by RBI, rising crude prices and fear of US taper

Revenue guidance increase offsets modest disappointment in operating margins

Many investors accumulate stocks of firms emerging from bankruptcy, lured by stray cases of windfall and without understanding the inherent risk in such investments

Long term investors can wait for clarity on surplus utilization and better entry points

Valuations are at the higher end of industry range

Only 6% of incremental goes to industry in 2 years till May

The company’s execution track record is good

The company's operating margin trajectory is not clear

Higher valuations compared to some of the steel players make it a costly bet

Look for clarity on sustainability of earnings in coming quarters

This contrasts with FY08 commodity boom when they expanded aggressively

Despite robust investor interest, experts point out that its speculative nature and volatility in prices cannot be wished away

Any significant rise in slippages or restructuring from current levels can lead to rise in provisioning

Covid 2.0 and rising commodity inflation, a worry

Increase in raw material costs and business impact due to lock down bear watching

Re-imposition of mobility restrictions and tapering of policy support may impact domestic demand recovery, but international opportunities may hold the fort.

Retail book grows faster, but cushion available from higher proportion of secured advances

Limited price increase amid steep rise in prices of commodities impacted operating profits and margins

Benign slippages, strong growth in retail loans and sharp spike in earnings helped boost investor sentiment