What is your take on HDFC’s quarterly numbers?
The numbers were in line with expectations. In the near term, the challenges could be only with the commentary. Commentaries of larger banks or NBFCs who have reported their numbers have been quite good. Asset quality has improved for most of the clients. So I think that the management’s stance in the second wave is going to be important for HDFC.
For those who have missed out the metals rally, does the market still offers an opportunity to buy afresh?
There is some steam left in metals. If you look at a 10-year average EV to EBITDA, we are still trading at 6.5 times. The 10-year average is 6.9. Secondly, if you look at the higher LME prices, margins are going to improve quarter-on-quarter.
The commentary from Tata Steel was very strong. I think it will continue to go up. One thing is very clear that this rally will retire their debts. We have spoken with the SAIL management. They also mentioned the same thing. Jindal Steel and Power also came out with the same statement. Tata Steel has already retired Rs 25,000 crore debt. So I feel there is some more steam left in steel stocks.
My preference would be SAIL. At the current level, there is still some 20-25% upside left. Second is JSW Steel where another 15-20% can be made easily. I think all steel stocks will continue to go up in the next few months.
What are you pencilling in from L&T in their quarterly numbers? What do you want to hear in terms of guidance? Their order book position has been fairly healthy despite challenging times.
The most worrying factor is the second wave. How the recent lockdowns in few states are going to impact them is the bigger challenge. The numbers should be in line with expectations. Things looks okay for L&T. Any correction gives an opportunity to buy. It is reasonably priced. Now the only thing we are looking at is the management’s commentary.
