Friends,
The story of metal sector is one of maintaining the PE ratio at 9 in 2008 against 8 in 2000. This sector has also slightly gained in share in total capitalisation in 2008 at 5% against 3.5% in 2000. At present the profitability is at very high level and was expected to come down in terms of OPM but somehow this has not happened due to late addition in fresh capacity and the demand keeping high rate of increase due to GDP growing at no less than 9% . There seems to some threat in the form of US slow down and China having lesser demand thrust while maintaining robust production rate. Since PEs are reasonable in this sector and a lot of book value addition has taken place in recent past which has gone in to further capacity creation for most players , there is reasonable scope of getting rewarded for remaining invested for some time and get out only on sudden big moves.
HariOm,
krsnakhandelwal
