Synopsis: InCred Equities sees upside in Tata Steel and SAIL, driven by demand recovery and policy support, while it warns JSW Steel is overvalued with limited fundamentals, maintaining a ‘REDUCE’ rating.
InCred Equities has turned bullish on the steel sector, upgrading Tata Steel and SAIL to ‘ADD’ with potential upsides of 27% and 21.5% respectively, driven by demand recovery and government support. In contrast, it maintained a ‘REDUCE’ stance on JSW Steel, citing stretched valuations and weak fundamental justification.
SAIL: Stable & Protected Growth
SAIL (Steel Authority of India Limited) is a government-owned PSU, is among the country’s oldest and largest integrated steel producers, benefiting from captive iron ore mines, policy support, and a stable domestic demand base.
With market capitalization of Rs. 53,701 cr, the shares of Steel Authority of India Ltd are closed at Rs. 129.90 per share, from its previous close of Rs. 129.46 per share. The target price set by InCred is Rs 158, implying 21.5% upside from the current levels, with future earnings led by volume growth and steady operating leverage.
SAIL benefits from policy-driven stability, especially due to its PSU status that lets it retain captive iron ore mines, insulating the business from raw material volatility. According to InCred, SAIL’s valuation remains fair at about 1x its book value, which is close to its long-term average. The brokerage expects Ebitda per tonne to hold steady at Rs. 7,000–8,000 through FY24–26, with earnings per share likely to grow around 8% annually. Supported by a strong balance sheet, lower leverage, and favorable policy environment, the stock offers limited downside and visible short-term upside.
Tata Steel: Recovery and Upside
Tata Steel is one of India’s largest steel producers, operates globally with a strong presence in both India and Europe, focusing on value-added steel and sustainability-driven growth.
With market capitalization of Rs. 2,20,383 cr, the shares of Tata Steel Ltd are closed at Rs. 176.66 per share, from its previous close of Rs. 174.44 per share. The brokerage assigns a BUY target of Rs 224 which is 27% upside from the current levels
InCred upgraded Tata Steel to ‘ADD’ from ‘REDUCE’ earlier, citing an expected recovery in its European operations and policy-driven strength in its Indian business. The brokerage assigns a BUY target using a 2.5x price-to-book value (P/BV) multiple for FY27 projected book value Tata Steel is positioned as a leveraged play on India’s industrial upcycle and potential demand boom in post-war Europe.
JSW Steel: Valuation Concerns
JSW Steel is part of the JSW Group, a leading private-sector steel manufacturer known for aggressive capacity expansion and operational efficiency, but currently faces valuation concerns.
With market capitalization of Rs. 2,80,801 cr, the shares of JSW Steel Ltd are closed at Rs. 1,150.60 per share, from its previous close of Rs. 1,141.40 per share. InCred retained to ‘REDUCE’ and gave a target price of Rs. 939, which is 18% down from the current levels.
InCred highlights that JSW Steel trades at an unjustifiable 4x FY26F book value, far above what is typical for a cyclical sector like steel. This elevated valuation, combined with consensus forecasts for Rs 34,000 crore EBITDA in FY26 that are seen as highly optimistic, means recent price levels rely more on sentiment than fundamentals.
Written by Manideep Appana
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