Cement and road construction companies to stay on our watchlist: Mayuresh Joshi

economictimes.indiatimes.com:

Mayuresh Joshi, Head-Equity Research — India, William O Neil, says “as prices recover on the LME with China demand expected to come back in the next financial year, even the top-line growth in terms of realisations for a lot of ferrous players will continue to gain traction in the next year and a half as well. So domestic steel companies like JSW Steel can continue.

Who would have thought a steel company in the last 10 years would have given you a 9x return?
Domestic steel companies are still holding out. The expectations that are now coming off is that a large part of the capex is largely behind us. I think some part of the capex is going to get carried forward in this financial year and the first half of the next. But the bulk of that capex is probably behind us.

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With the expansions that are probably happening at its respective plants and the backward integration operations thereof as well, we are probably going to see a better EBITDA number on an absolute basis than an EBITDA per tonne that JSW Steel is going to produce.
Again, it is largely a cyclical industry. We all know that. But a large element in terms of the infrastructure spending that is still expected to come through from the government side, will reflect in better numbers for at least these domestic steel companies, where a lot of consumption might happen on local sources. As prices recover on the LME with China demand expected to come back in the next financial year, even the top-line growth in terms of