Tata Steel, Jindal Steel, NMDC, SAIL: Metal stocks to buy, add, sell. ICICI Securities’ top picks
Domestic brokerage and research firm ICICI Securities highlighted that in China, divergent trends are in steel stocks- rebar inventory increased, however, HRC inventory declined WoW. However, on the positive side, real estate sector is showing the initial signs of recovery. The brokerage still has retained its circumspect outlook on the sector with JSPL and Shyam Metalics as the key stock picks in the space owing to the ensuing cost efficiencies and volume growth potential, respectively.
Metal stocks to buy, sell, add as recommended by ICICI Securities –
Jindal Steel (BUY)
Jindal Stainless (BUY)
SMEL (BUY)
APL Apollo (BUY)
NMDC (ADD)
Tata Steel (ADD)
SAIL (REDUCE)
JSW Steel (SELL)
“While real estate market is showing initial signs of improvement, we wait for more clarity on stimulus measures in China post CNY and their impact on the overall steel demand. In India, the decline in spreads post Jan-23 threatens to spoil the profitability of companies in Q4FY23. We maintain our cautious outlook on the sector with JSPL (target price: ₹750) and Shyam Metalics (target price ₹425) as our top picks owing to their longs-heavy product portfolios,” the note stated.
ICICI Securities’ channel checks indicate that the rise in Chinese steel price at $15/te since CNY holidays has been lower than the market expectations. Besides, buying interest from the UAE market has slowed down. In Vietnam, traders are awaiting Formosa’s price offer for Feb-23 before deciding the price. Europe, however, throws up increased opportunity for Indian players in the aftermath of earthquake in Turkey- the largest exporter of steel to Europe.
“We believe Indian players are well placed to fill in the gap, though the latest offers from Europe are slightly lower ($10/te) WoW. Raw material spread has dipped by ₹1,650/te WoW to ₹23,230 (lowest since Mar-22) owing to higher coking price- up US$17/te WoW. Global iron ore price has, however, been range-bound between US$120-130/te since CNY owing to the uncertainty around pace and the extent of demand revival in China,” it added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.