SAIL, Tata Steel to JSPL: Nuvama raises target prices for steel stocks by 9-22%. Here’s why

Brokerage firm Nuvama Institutional Equities anticipates an additional flat steel output of 14–15mt during the fiscal years FY26E and FY27E. India is projected to have a surplus of Hot Rolled Coil (HRC) in FY26E.

The brokerage reported that major steel manufacturers like Tata Steel, JSW Steel, and Jindal Steel & Power have recently begun operations at their HRC plants, which have a combined capacity of approximately 17mtpa, and are currently in the process of ramping up production, alongside increased output from Arcelor Mittal and NMDC Steel.

Consequently, India will need to explore export markets to accommodate the extra volumes, which is only feasible if China curtails its exports, a scenario that could occur if China reduces its production or if demand experiences growth, according to Nuvama.

The implementation of safeguard duties will limit imports and assist producers in compensating by increasing their capacity utilization. Nevertheless, with domestic supply on the rise, this will likely prevent any significant increase in steel prices. Therefore, the brokerage asserts that a revival in global economic growth, elevated exports from India, and sustained robust domestic demand are crucial to maintaining higher steel prices over the next year.

Revise earnings upwards by 8–14% for steel companies; target price by 9–22%

The brokerage is increasing its average hot-rolled coil price forecast by approximately ₹2,000/ton for FY26/FY27 for all steel firms. The brokerage is optimistic not only about domestic prices but also believes that steel prices in China may rise due to anticipated supply reforms.

"As a result, we are raising FY26/FY27 EBITDA by 12–14% for Steel Authority of India Ltd (SAIL) and JSW Steel, and 7–8% for Jindal Steel & Power (JSPL) and SAIL. This lifts target price by 22% for SAIL, 19% for JSW Steel, 13% for Tata Steel and 9% for JSPL. Maintain ‘BUY’ on JSPL and SAIL while we retain ‘HOLD’ on Tata Steel and ‘REDUCE’ on JSW Steel on rich valuation," the brokerage.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.