NMDC is a standout performer in metal stocks: Phani Sekhar, Angel Broking

In a chat with ET Now Phani Sekhar, Fund Manager-PMS, Angel Broking shares his views on metal stocks.

ET Now: We have talked about the metals space last month as well, wherein 8% uptick coming in this series too, what is it that you like and is there still scope to make money?

Phani Sekhar: Here, a lot is riding on recovery in China which explains why companies with international exposure like Tata Steel or Hindalco have been excited. So that is a space that is completely different and dependent I guess in the very near term on news flow because one has to wait and see what kind of durable recovery China posts. To my mind, a 10% kind of recovery in the medium term looks unsustainable and China seems to be on a anywhere between 8% to 9% growth path.

As far as domestic medal companies are concerned, there are severe material constraints but I am seeing an opportunity within that space in the form of an NMDC because it is gaining the maximum advantage of this raw material constraint being imposed even on miners such as Sesa Goa because you have Karnataka, Goa and Orissa, of course mining output has almost shrunk to half and a majority of that output now is coming from NMDC and over the next six months, there is a very good chance that India will turn into a net importer of iron ore because the iron ore output from Goa is not suitable for domestic operations.

So that will anyway have to be exported. The rest of the geographies will not be sufficient to meet the demand, although this demand is not as buoyant from the domestic steel industry. So NMDC which little now had an export backed pricing will start enjoying import parity pricing. So I guess NMDC is a standout performer out there and one has to keep looking for that.