The NDA Government's recent moves on Export Duty Front and Steel Stocks

The Union government's move to reduce import duty on some raw materials and put export duty of 15% on a range of finished steel products (accounted for almost 95% of India’s overall finished steel exports in FY21 and FY2) amid tepid demand during the seasonally weak monsoon quarter could lead to 10-15% correction in  domestic steel prices in the coming months, according to the ratings agency ICRA. But this is seasonal demand slackness is natural and normal. Photo: India Infoline.

However, the point is whether the steel companies will be able to offset the expected loss of export gains with domestic leverages. 

The market sources say that, the demand for steel would continue to rise in the domestic market, which would somehow balance the recently imposed Export Duty on finished steel products. In addition, lower cost of raw materials would be positive for steel companies,. especially in the iron ore space.

Besides, the fall in Steel price (if any in future) doesn't automatically indicate a fall in the net margins of steel companies.

Buy the shares of SAIL (Steel Authority of India Ltd) near 52 - week low price of Rs.71.70, at the CMP of Rs.73/Rs.73.45 for short term targets of Rs.91/97.