
CLSA has analyzed the impact of currency concerns on the materials sector, highlighting key trends and preferences across sub-segments like cement, consumer durables, and metals.
Key highlights:
- Impact on cement and durables:
- Mild negative impact due to import dependencies.
- Sensitivity to currency fluctuations is lower than a decade ago, supported by improved profitability and reduced leverage.
- Metals sector outlook:
- Positive outlook as metal realizations are largely linked to USD, especially for exports.
- Costs are partially denominated in local currency, providing a natural hedge.
- Companies in this segment benefit from stronger balance sheets compared to FY14/FY19.
- Preferred stocks in metals:
- JSPL, Vedanta, and Hindalco emerge as CLSA’s top picks in the sector, given their resilience to currency fluctuations.
With lower leverage and improved profitability across the materials sector, CLSA notes that the balance sheet impact of currency concerns remains manageable, favoring metals over cement and consumer durables.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.