Index : 1,756 | 1Yr : +10.89% | 1Mo : +2.2%
Category : Sectoral Trackers
Min Investment : 2,296
The forging industry plays a large role in the manufacturing capacity of a nation. Forging companies are modern day blacksmiths that have large furnaces installed to manipulate metal into specific shapes and structures for different industrial purposes. The demand is mainly driven by automobiles, railway, cement, steel, aerospace, heave engine equipment manufacturers, oil and gas sectors. Of these, the automobile industry accounts for about 70% of total demand.
These companies are very raw material centric and largely depend on the prices of steel, aluminium, titanium, brass, copper etc. which account for 60% of their total cost of manufacturing. Hence, they are highly sensitive to the demand / supply factors of these commodities.
Since this industry is highly capital intensive, it prevents domestic competition from new players and promotes consolidation among existing ones. When there is an upturn in the business cycle of the large-scale manufacturing sectors, well managed forging companies are most likely to derive its benefits.