Tata Steel, Jindal Steel, JSW Steel: Which metal stock can deliver better returns in the long term?

By admin On Mar 15, 2023

Shares of Tata Steel, Jindal Steel and JSW Steel are among the key picks in the Indian metal sector. Investors are likely to add more metal stocks in their portfolios as economic data in China is showing signs of recovery. Manufacturing PMI in the neighbouring country has risen to a 11-year-high and property prices have started to stabilise. This has led to a spike of 14% in China export steel price in CYTD 2023 post a 23% decline in CY22, said brokerage Jefferies in its ‘Metals and Mining’ report.

Here’s a look at what brokerages and analysts said about the outlook of the three metal stocks.

Tata Steel

Vaishali Parekh, Vice President – Technical Research at Prabhudas Lilladher said, “Tata Steel after the correction witnessed has come near the significant 200DMA level of Rs 105 and witnessed a consolidation at that zone to suggest bottoming out for the stock and with a pullback visible is anticipated to carry on with the positive move still further ahead. The RSI has indicated a trend reversal from the oversold zone and is well placed at current price rate. We expect the stock to move ahead for initial target of Rs 115 and thereafter Rs 124-127 zone if it breaches Rs 115 zone decisively.”

Abhijeet from Tips2trade said, “Tata Steel has a strong support at Rs 101. A daily close above Rs 125 should trigger a strong uptrend till Rs 165 over a longer term period.

Brokerage Jefferies has assigned a Buy call on Tata Steel with a target price of Rs 145 apiece.

“For Tata in particular, the European business (TSE) contributes just Rs 11 per share of EV to our price target of Rs 145. We see the recent underperformance as a buying opportunity in Indian metals; our top pick is Tata, followed by Hindalco,” the brokerage said.

Brokerage and research firm BOBCaps said it prefers Tata Steel with a target price of Rs 140. The brokerage has Buy rating on Tata Steel.

Rohan Shah, Head Technical Analyst at Stoxbox has a cautious stance on the metal stock.

“In the near term, stock has a strong support zone at Rs 103-102 levels, which is backed by previous swing low and 50 per cent retracement levels of its prior whole up move from Rs 83 to Rs 124. Going ahead, if the stock holds the said support, a pullback towards Rs 113-117 cannot be ruled out. However, if the stock fails to hold the mentioned support zone, it is anticipated to continue its downmove. In that case, Tata Steel prices may fall towards Rs 98 and Rs 92 levels”, said Shah.

JSW Steel

Motilal Oswal has assigned a neutral rating to the stock with a price target of Rs 710.

“JSW Steel core operations (standalone business) are expected to post a crude steel production of 23.6 million tonne and sales of 22.6 million tonne in FY23. JSW Steel expects export volumes to rise to mid double digits in FY24. While JSW Steel is well placed, the stock trades at 5.8x FY24E EV/EBITDA and appears to be fully discounting the benefits. We reiterate our Neutral rating on the stock with a target price of Rs 710 (6x FY24E EV/EBITDA,” said the financial services firm.

Sneha Seth, Derivatives Research Analyst, Angel One said, “JSW Steel Ltd is one of the strongest candidates if compared to its peers. Lately, we are witnessing a rangebound move of merely 45-50 points for the last couple of weeks now. Technically, the overall chart structure remains bullish, there is higher top higher bottom formation, and it is also trading close to the rising trend line support placed around Rs 690-695 odd zone. On the upside, any sustainable move beyond Rs 735-740 odd zone should trigger fresh buying interest, which can bring it towards record highs.”

Abhijeet Bora, DVP Research Analyst at Sharekhan by BNP Paribas said, “We believe that earnings downgrade cycle is largely over for steel companies and a recent recovery in steel price would drive gradual margin/earnings improvement for steelmakers. Having said that, we believe situation for steel players is wait and watch as steel margin upcycle (as seen in 2020-2021) is still not clearly visible given demand concern in US/Europe and concern of elevated coking coal price. Hence, we have a reduce rating on JSW Steel with price target of Rs 620 as valuation of 8.2x FY24E EV/EBITDA seems rich as compared to the historical average of 6.5x and we expect net debt (stood at Rs 69,498 crore as of December 2022) to remain high given the company’s capex plan.”

Jindal Steel and Power (JSPL)

Brokerage and research firm BOBCaps has assigned a target price of Rs 670 to the metal stock.

“Our interactions with the two global majors affirm our view of continuing recovery despite slower CY23 growth in China and higher interest rates in the western world. We retain our constructive outlook on Indian steel sector and continue to prefer Tata Steel (BUY, target price of Rs 140) and JSPL (BUY, TP Rs 670),” it said.

ICICI Securities has assigned a buy call on Jindal Steel & Power with a target price of Rs 750. The current market price of Jindal Steel & Power is Rs 584. The stock is one of the key picks of the brokerage given the ensuing cost efficiencies, the brokerage said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)

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