Steel stocks have so far stayed aloof from the market rally. However, the sector can turn the corner if policy logjams are cleared and there is fresh impetus from 'Make in India'
Since 2009, most indices have ascended one summit or another. Stocks of major Indian steel producers, though, have not participated in these rallies.
The poor stock performance of steel companies is symptomatic of their weak financials. Struggling with average operating margins of 10-12 percent, the businesses are returning very low levels on capital employed —an average of just above 8 percent for FY14 (consolidated level). Data for the first three quarters of FY2014-15 suggest no improvement due to certain fundamental concerns.
(This story appears in the 12 June, 2015 issue of Forbes India. To visit our Archives, click here.)