Tata Steel, JSPL, SAIL, JSW Steel: Which metal stocks to buy, hold? Brokerage bullish on these shares

“Steel profitability is expected to improve in 2HFY23 aided by lower coking coal, iron ore costs, and better volumes. Valuation of steel companies at 4.4-6.0x FY23E EV/EBITDA is attractive and sentiment would improve with stability in prices and recovery in steel spreads,” the note stated.

Valuation of steel companies at 4.4-6.0x FY23E EV/EBITDA is attractive and sentiment would improve with stability in prices and recovery in steel spreads, as per the brokerage. It has maintained its BUY rating on metal stocks Tata Steel, JSPL and HOLD stance on SAIL, JSW Steel.

“International iron ore prices have softened and are currently at ~USD 110 per ton. International spot coking coal prices have risen ~16% over the past month to USD 286 per ton, which however is still 19% lower than 1HFY23 average of USD 352 per ton and would aid steel spreads in 2HFY23. Revocation of export duty would also increase export feasibility in 4QFY23/FY24 along with strong domestic steel demand,” the note stated.

Chinese export HRC prices have risen 14% to USD 585 per ton from a recent low of USD 515 per ton, while Chinese domestic steel prices have also increased 16% to USD 590 per ton from lows of USD 509 per ton amidst reports of opening up of the Chinese economy. Chinese EBITDA spreads continue to remain negative, limiting material downside in prices, said Antique. 

“Domestic steel HRC spot prices have been range-bound at INR 53,500-54,500 per ton levels and are currently at 5% discount to Chinese import parity prices,” it added.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.