Nomura has reiterated its bullish stance on India’s steel sector, citing strong domestic demand and supportive global cues, and named JSW Steel and Jindal Steel as its top picks. The brokerage raised its target price on JSW Steel to ₹1,300 from ₹1,220 and on Jindal Steel to ₹1,150 from ₹1,080, reflecting improved earnings visibility through FY28.
The brokerage said production cuts in China and the likelihood of fresh property-focused stimulus measures from Beijing should lend support to global hot-rolled coil (HRC) prices. “We reiterate our bullish stance on the India steel sector, notwithstanding the recent moderation in steel prices, as both domestic and global tailwinds remain supportive,” Nomura said.
China’s crude steel production fell 2 per cent year-on-year in the first seven months of 2025, and Nomura expects more aggressive curbs through the year-end, with output likely down about 9 per cent year-on-year over August–December. Meanwhile, the brokerage highlighted the weak state of China’s property sector but expects incremental stimulus at the Communist Party’s October plenary session to provide a boost.
Strong domestic fundamentals
India’s steel industry, Nomura noted, continues to show resilience. Crude steel production rose 9 per cent year-on-year and apparent consumption increased 8 per cent in the first four months of FY26. The imposition of safeguard duties has cut imports sharply—down 65 per cent to 0.37 million tonnes in April–July 2025 from 0.99 million tonnes a year earlier—easing pricing pressure on local producers.
Despite seasonal weakness leaving Indian HRC prices at a discount to landed import costs, Nomura expects prices to climb around 5 per cent above current spot levels in the second half of FY26, aided by firm demand and tighter imports.
Stock views
On JSW Steel, Nomura said it expects steady earnings expansion driven by capacity additions of 7 million tonnes by FY28 and progress toward raw material self-reliance. It reaffirmed its Buy rating and raised its target to ₹1,300, implying a 17 per cent upside.
For Jindal Steel, Nomura raised its target to ₹1,150, implying an 11 per cent upside, citing upcoming capacity additions of 6.3 million tonnes by FY27, improved product mix, and better cost efficiencies. While it cut near-term volume and EBITDA estimates due to delays in commissioning new capacity, the brokerage remains positive on medium-term growth, forecasting a 26 per cent EBITDA CAGR between FY26 and FY28.
“Robust consumption, import discipline, and improving pricing dynamics support a constructive outlook for the sector,” Nomura said.
Metal shares rose 1 per cent on Tuesday after Nomura reaffirmed its positive outlook on India’s steel industry.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
