Why Steel Sectors Can Give Multibagger Return in 2018

2017 has been an extremely rewarding year for Indian stock market, but with market touching all time high of 11,000; investing in stocks can become riskier. Most good stocks in all sectors are trading on high valuation and there is a very high probability that they may not give great returns in 2018.

However, steel is one sector, which can give great returns as they are in upward trajectory. There is a good chance that integrated steel companies will be among top performing multibagger stocks in 2018.

Here are some steel companies where you can give a look:

  • Godawari Ispat and Power: Already 3X December 2017-January 2018. Backed by Mudar Partheya.
  • Prakash Industries: Rakesh Jhunjhunwala
  • Jindal Steel (Hisar): DD Sharma
  • Jindal Saw
  • Sunflag Iron: Backed by SP Tulsian. It supplies steel for auto, road and defense sector. Completely debt free and selling below book value. of 0.94. 

The beginning of great bull market has started in the sector as promoters have started buying from the open market aggressively.  It’s to be noted that Prakash Industry promoters have issued warrants at 140 INR, Godawari Power issued warrants at 130 INR; , Jindal Steel and Power promoters have issued warrants at 140 INR. This clearly reminds us of the earlier trend of paper and chemical sectors when promoters were aggressively buying and stocks in these sectors gave multibagger returns.

We can hope these steel stocks will give fantastic returns in the next 2-3 years. China has decided to cut steel production and this will help steel companies in the next 2-3 quarters. Domestic demand is also expected to increase by 5% as per an estimate by Kotak Institutional Equities. Savvy investors and stock pickers are aggressively buying these stocks.

 

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