Vedanta, Tata Steel, Hindalco and NMDC.

Discussion in 'Ask A Query About Your Stock Picks And Portfolio' started by ajay6uc, Aug 20, 2015.

  1. ajay6uc

    ajay6uc New Member

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    Hi All,

    These four stocks are almost its 6 to 7 years low. Want to accumulate any one of them as mentioned by Basant Maheshwari that commodity stocks should be bought when its trading at lowest level. I don't want to accumulate all of them but only one among these, which one should I buy for 2-3 years .
    Thanks
     
  2. Meenakshi Razdan

    Meenakshi Razdan Administrator Staff Member Moderator

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    Well, the theory that one should buy stocks when they are trading at their lowest levels applies to all sectors and all stocks. :) You can also consider realty stocks which are currently beaten down owing to the slowdown in the sector.

    The commodities sector is subject to trends in the global economy while the realty sector is not as affected. A cut in the interest rates (which appears to be impending) may spur the realty sector while the commodities sector will require bigger catalysts.

    The other aspect that would have to be considered is whether there is more sense in investing in stocks which have been on a secular growth path for the past several years (e.g. Pharma stocks). While there is no valuation comfort in these stocks, the predictability of earnings and the huge scale of opportunity in the global market place does make them attractive.

    Of the four stocks referred to by you, NMDC offers the highest dividend yield, followed by Vedanta and Tata Steel. So, I suppose, if one did have to choose a commodity stock, a high dividend yield stock may make more sense.
     
  3. kharb

    kharb Well-Known Member

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    I was having Hindalco,Tata steel and Vedanta.Today only I have sold Vedanta and Hindalco at huge loss about 50%.I may sell Tata steel soon.In this also loss will be 50%.I had hold these for more than 8 years.It is true that we should buy commodity stocks at down turn.But it seems here case is different.Tata steel and Hindalco acquired business in foreign countries at peak of cycle at heavy price.They have now huge debt and bleeding acquired business which is twice the size of Indian operations.Vedanta has invested huge money in Orissa ,with raw material mines cancelled and it is unviable to run that capacity with imported raw material.So now Vedanta has now 70000 Crore debt,with green field orissa project almost gone for a song.Now here there are two advesre situation for all three.Adverse commodity cycle,which these compnies might have faced successfully if had not done these failed acts.Now they will have to face music from two sides,huge debt and unviable new or acquired operations.Who knows thse are next JP Associates ,Punj Llyod ,IVRCL in making.I had also seen this loss in JP ,IVRCL and Punj Llyod.So I thought it is better to book 50% loss in comparison to 90% incured in JP,IVRCL and Punj Llyod.Situation is tricky just not commodity cycle.
     
    Last edited: Aug 20, 2015
    Meenakshi Razdan likes this.
  4. ajay6uc

    ajay6uc New Member

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    Thanks Meenakshi and Kharb for your nice explanation. Today only NMDC made life time low of 92 rs. I also thought its better bet as debt free and cash on the book also good dividend yield. When there will be turn around this will do better for example look into Shipping corporation was at 28 even though it has debt now at 75 and NMDC has not debt, cash on the book, good dividend yield only factor is growth which sometime will happen when commodity cycle will turn.
     
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