India is one of the largest exporters of steel globally, with the sector contributing significantly to the country’s economic development. The steel industry is seeing strong demand due to rapid infrastructure development, urbanization, and industrial growth. Government initiatives like “Make in India” and a focus on infrastructure projects are expected to further boost steel production and exports. Major players like Tata Steel, JSW Steel, and Steel Authority of India (SAIL) continue to lead the market, driving innovation, capacity expansion, and market growth.
Impact of 25% Import Duty
The Indian government has recently imposed a 25% import prevention duty on certain steel products to protect domestic manufacturers from cheap foreign imports. This measure aims to boost local production, reduce dependency on imports, and enhance the competitiveness of Indian steel companies in the global market.
Brokerage Updates
Jindal Steel & Power Limited (40% Upside Potential; CMP 930)
Nuvama’s Bullish Outlook on JSPL
Brokerage firm Nuvama has expressed a bullish view on Jindal Steel and Power Limited (JSPL), maintaining a BUY rating with a target price of Rs 1,292. The firm’s positive outlook is driven by expectations of resumed volume growth from FY26. Nuvama has also highlighted the company’s progress in addressing bottlenecks at its pellet plant, which will enable JSPL to ramp up steel production to 8.3 million tons (mt) by FY26, up from its current capacity.
Volume Growth and Capacity Expansion
Nuvama expects JSPL to commission a 3.3 million tonnes per annum (MTPA) steel capacity by the end of FY25. This expansion is expected to provide much-needed visibility in volume growth, a key factor missing since FY22. The brokerage also noted that Q4FY25 looks promising, driven by higher steel prices and volumes, even though it has slightly reduced its FY25E/26E EBITDA by 6%/4% due to lower volumes.
Bottleneck Resolution and Coal Block Approvals
JSPL is actively working on resolving the pellet plant bottleneck, which is crucial for increasing its steel production. Additionally, coal blocks are in the final stages of approval, with mining set to begin by Q1FY26. These developments will support the company’s long-term growth prospects, further enhancing volume expansion.
Government Capex Push and Market Impact
Nuvama also believes that the government’s expected capex push in Q4FY25 will further drive volume growth. The firm’s analysis suggests that this will benefit JSPL, alongside the broader
market, with increased steel demand driven by infrastructure and industrial projects. This momentum is anticipated to support the company’s growth trajectory.
TATA Steel (27.7% Upside Potential; CMP 137)
Axis Securities’ Positive Outlook on Tata Steel
Axis Securities has set a price target of Rs 175 for Tata Steel, driven by expectations of strong growth in sales volume. The brokerage firm forecasts a consolidated sales volume increase of 1-1.4 million tonnes (MT) in FY25. This growth will be mainly driven by 1.1 MT from the KPO-II project and 0.2 MT from NINL, though offset slightly by a shutdown at one of Tata Steel’s blast furnaces in Jamshedpur for relining during Q4FY25.
Volume Growth and Profitability Improvement
Axis Securities anticipates that Tata Steel’s Indian operations will benefit from increased profitability as the KPO-II ramps up. By FY26 and FY27, KPO-II will add 3.5-4 MT and 5 MT to the company’s sales volume, respectively. The ramp-up in capacity is expected to boost Tata Steel’s earnings potential, as higher volumes translate into improved profitability.
Cost Reduction and Operational Efficiency
As KPO-II reaches full capacity by FY27, Axis Securities expects a reduction in cost by Rs 3,000-4,000 per tonne. This reduction will result from operational leverage as the plant expands from 3 million tonnes per annum (MTPA) to 8 MTPA, contributing significantly to Tata Steel’s overall cost efficiency and profitability.
Long-Term Growth Prospects
With increased sales volume, improved profitability, and operational efficiencies, Axis Securities maintains a positive outlook for Tata Steel’s long-term growth. The ramp-up in capacity at KPO-II and the resulting reduction in costs will support Tata Steel’s competitive position in the global market, making it well-positioned for sustained growth in the coming years.
Written By: Dipangshu Kundu
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