Brokerage Backs Indian Steel Makers as Trade Rules and Strong Demand Lift Sector

Indian steel makers face a long period of growth as tighter supplies, steady local demand and trade protection rules push up prices, according to a report by Aditya Birla Capital.

Stock Ratings

The brokerage started coverage on JSW Steel and the Steel Authority of India with Buy ratings, pointing to capacity growth for JSW and profit margin recovery for SAIL. It gave Add ratings to Tata Steel and Jindal Steel, while also starting coverage on ArcelorMittal with a Positive view based on its plan to grow Indian capacity from 9 million tonnes to 40 million tonnes.

Target Prices

JSW Steel has a target price of 1,425 rupees, which suggests an 18 percent rise from its price of 1,220 rupees on 22 October. SAIL holds a target of 225 rupees from a price of 170 rupees, pointing to a 36.8 percent upside. Tata Steel has a target of 190 rupees against 172 rupees, while Jindal Steel has a target of 1,075 rupees against 1,028 rupees.

Market Drivers

Global steel markets are growing stronger as trade barriers change how steel moves across borders. Rules like the European Union tariff-rate quotas, US Section 232 tariffs and India safeguard duty help local companies keep better pricing power. Market fears that India will drop its 11 to 12 percent safeguard duty in 2028 are likely overdone, since policy support will likely stay in place past that year.

Context

Brokers study industry supply and demand trends to help investors find potential long-term winners in the stock market. Steel is a core material used heavily in building, infrastructure, and manufacturing projects across the country.