Stocks to Buy: Tata Steel, JSW Steel, Jindal Steel & Power among top bets in metal sector

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Also Read: Current market offers a great accumulation opportunity; concerns over IT sector overblown, says Karan Doshi of LIC MF With improved supply conditions, coking coal prices are expected to moderate and drive EBITDA margin improvement for steel players. The brokerage believes JSW Steel, Jindal Steel & Power Ltd (JSPL) and Tata Steel are well placed to benefit from upcoming capacities. With the government’s increasing shift towards using stainless over carbon steel, usage has increased in India benefiting Jindal Steel.

“Hindalco Industries is the biggest beneficiary of gradual recovery in developed nations driving CAN sheet volumes. NMDC is improving its focus on volumes while National Aluminium Company and SAIL would be pure play on prices," Prabhudas Lilladher said. The brokerage expects the top four steel majors, namely JSW Steel, Tata Steel, JSPL and SAIL, to continue gaining market share as they are adding capacities to cater to this strong growth.

While it estimates incremental production at 10.9 m tons in FY24 and 10.6 m tons in FY25; incremental demand is expected at 11.9 m tons in FY24 and 10.5 m tons in FY25. “Strong demand is expected to keep prices higher in Indian markets, if there is no further meltdown in China and incremental exports remain limited. As there is expectation from China to curtail production in 2HFY24, we believe global steel prices to get support from here and domestic companies to be major beneficiaries of the same," the brokerage said.