Global brokerage firm Jefferies issued fresh "buy" calls on Jindal Stainless, while retaining its "buy" ratings on Tata Steel and Coal India, reflecting a confident outlook on India’s steel sector. The firm sees strong structural support for the industry and expects key companies to deliver volume CAGR of 8–10 percent over FY25 to FY27.
According to Jefferies, a 12 percent safeguard duty imposed by the Indian government on flat steel imports in April 2025 has been instrumental in boosting domestic profitability. The safeguard, which is in place for 200 days, was introduced after flat steel prices in India declined by 15 percent between June and December 2024, pressured by weak Chinese pricing and a surge in imports. The government is expected to review the duty’s impact around August to September 2025.
Since the duty was imposed, domestic steel prices have risen by 14 percent year-to-date, reinforcing the brokerage's confidence in the near-term outlook.
Jefferies also highlighted that current Asian conversion spreads are about 30 percent below their long-term average, which, combined with an 18-year historical trend, indicates a favorable risk-reward profile for holding steel stocks at current spread levels.
In terms of specific stock calls, Jefferies initiated a ‘Buy’ on Jindal Stainless with a target price of Rs 800 per share, retained its ‘Buy’ on Tata Steel with a target of Rs 200 per share, and maintained its ‘Buy’ on Coal India with a target of Rs 455 per share.
That said, not all metal names made the cut. Hindalco was downgraded from ‘Buy’ to ‘Hold’, with its target price cut to Rs 690, as analysts flagged muted earnings growth as a concern.
While steel stocks are currently trading above their 10-year average price-to-book (PB) ratios, Jefferies believes these elevated valuations are justified. “We expect valuations to sustain, supported by healthy volume growth and margin expansion potential across the industry,” the firm noted.
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