Tata Steel, JSW Steel, SAIL, Jindal Steel, NDMC, Hindalco: Check targets for metal stocks

Centrum Broking believes that the metals and mining sector displayed a patchwork of trends in February. Divergent price movements across key steelmaking inputs and non-ferrous metals shaped the sector’s outlook, reflecting ongoing global and domestic volatility.

Centrum Broking observed that iron ore prices retreated, with Australian iron ore softening by around 6 per cent month-on-month (MoM) and year-on-year (YoY) in February. In contrast, coal prices surged, particularly Australian coking coal, which gained approximately 5 per cent MoM and 31 per cent YoY. The brokerage cautioned that elevated coking coal prices are likely to weigh on near-term sector margins, although prices may ease as supply disruptions normalise.

Metal and mining stocks across the board were under severe selling pressure on Friday on the back of a combination of heightened geopolitical tensions in West Asia, which have spurred a ‘risk-off’ sentiment, coupled with concerns regarding global economic growth and potential demand slowdowns.

Within ferrous metals, steel prices posted widespread improvements. Indian domestic hot rolled coil (HRC) prices rose by 3 per cent MoM and 11 per cent YoY, supported by safeguard duties, healthy demand and higher input costs. Primary rebar prices climbed 7 per cent MoM and 11 per cent YoY. Centrum Broking highlighted that limited imports and robust demand, coupled with input cost inflation, have reinforced price momentum.

Western markets saw stronger price momentum than China. While China’s HRC export prices inched up 2 per cent MoM but fell 1 per cent YoY, European HRC surged 6% MoM and 24% YoY. US HRC prices advanced 3 per cent MoM and 30 per cent YoY. Centrum Broking attributed this to regional demand resilience and policy support.

Metal and mining stocks were under severe pressure on Friday with all constituents of BSE metal index trading in red. Leading the laggards, National Aluminium Company Ltd (Nalco) tanked nearly 7 per cent, followed by Hindalco Industries Ltd, which dropped up to 6 per cent.

Jindal Stainless, Steel Authority of India Ltd (SAIL) and Lloyds Metals and Energy Ltd and Tata Steel Ltd tanked 5 per cent each. APL Apollo Tubes, Hindustan Zinc, Vedanta, Jindal Steel, JSW Steel and NMDC and Adani Enterprises declined 3-5 per cent each during the trading session.

Global steel production patterns revealed pronounced geographical differences. Total crude steel output fell 7 per cent YoY to 147.3 million tonnes in January, driven by a 14 per cent YoY decline in Chinese production despite a 10 per cent MoM recovery. Conversely, India’s production increased 11 per cent YoY and 2 per cent MoM to 15.1 million tonnes, signalling ongoing strength.

Non-ferrous metals presented a mixed picture. Global aluminium production was stable year-on-year at 6.3 million tonnes, while LME aluminium prices dropped 2 per cent MoM to $3,065 per tonne but have rebounded amid geopolitical tensions. Zinc recorded a 3 per cent MoM gain, but lead and nickel softened by 4 per cent and 3 per cent MoM respectively. Centrum Broking pointed to the uneven nature of the non-ferrous segment.

Key sector competitors include major steelmakers, mining firms, and diversified metals companies with significant presence in both domestic and international markets. The report identified policy measures and input price volatility as factors affecting cost structures across the industry.

Centrum Broking suggested that while Indian producers currently benefit from healthier demand and government intervention, ongoing movements in global raw material costs and regional production trends will continue to impact sector performance. The brokerage anticipates further price volatility, especially as coal supply constraints ease and global demand remains uneven.

Centrum Broking has a ‘buy’ rating on JSW Steel (Target Price: Rs 1,294), Tata Steel (Target Price: Rs 218), Jindal Stainless (Target Price: Rs 861) and Ratnamani Metals & Tubes (Target Price: Rs 2,477). It has a ‘neutral’ view on Jindal Steel (Target Price: Rs 1,179), SAIL (Target Price: Rs 140), NMDC (Target Price: Rs 84), Hindalco (Target Price: Rs 918) and APL Apollo Tubes (Target Price: Rs 2,124).