Investors looking at metal stocks should take note of recent insights from a prominent brokerage firm, which highlights a favorable outlook for ferrous companies in light of the provisional safeguard duty implemented in Q4FY25. Meanwhile, non-ferrous companies could encounter hurdles due to ongoing tariff disputes. The brokerage is keen on recommending several ferrous stocks, positioning them as solid investments for the upcoming quarters.

Ferrous Stocks on the Rise

The brokerage has put a spotlight on several ferrous firms, indicating strong potential for growth. Their top picks include:

• Tata Steel (Target Price: ₹180)
• JSW Steel (Target Price: ₹1,230)
• Shyam Metalics (Target Price: ₹930)
• APL Apollo (Target Price: ₹1,935)

These companies are rated as "BUY," reflecting a strategic focus on domestic market operations. The brokerage believes that firms with robust domestic strategies, like Shyam Metalics, APL Apollo, and JSW Steel, are likely to navigate the current market challenges more effectively.

Non-Ferrous Challenges Loom

While the outlook for ferrous metals remains optimistic, the same cannot be said for non-ferrous companies. Although there is a medium-term positive sentiment towards non-ferrous metals, their performance may be constrained by global trade dynamics and fluctuations in LME prices.

Key Insights:

• Demand Growth: There was a slight drop in demand, but Q4FY25 showcased stable pricing and better spreads for ferrous products.
• LME Price Trends: LME Aluminum prices rose by 2%, while LME Zinc prices fell by 8% quarter-on-quarter.
• Volume Growth Projections: Ferrous companies are expected to see modest volume growth of 3-6% year-on-year, with JSW Steel anticipated to grow by 9% due to expansion efforts.

Performance Expectations for Key Players

The brokerage’s analysis reveals promising financial forecasts for specific stocks in the ferrous sector:

• APL Apollo: Expected EBITDA per tonne to reach ₹4,700, marking a 14% year-on-year increase and a 13% rise quarter-on-quarter, pushing total EBITDA beyond ₹4 billion.

• Shyam Metalics: Projected EBITDA is set to exceed ₹5 billion, the highest since Q1FY23, driven by an improved product mix and cost efficiencies. Anticipated EBITDA margin growth is 40 basis points quarter-over-quarter.

• Hindalco: Sales volume is expected to remain stable year-over-year while increasing by 5.3% quarter-on-quarter. Novelis’ EBITDA per ton is likely to exceed USD 490, benefiting from better scrap spreads and a rise in recycling and beverage can volumes.

• Gravita India: The firm is projected to achieve EBITDA exceeding ₹1.05 billion, supported by consistent growth in lead (Pb) and enhanced profitability in aluminum and plastics sectors. They are also expected to return to profitability at the EBITDA level after a loss in Q3FY25.

Caution for Jindal Stainless

The brokerage cautions that Jindal Stainless Ltd. may experience a decline in standalone EBITDA due to reduced exports, increased freight costs, and one-off expenses anticipated in Q4FY25.

For those keen on investing in the metal sector, keeping an eye on these developments will be crucial for making informed decisions. Explore more about the latest trends and stock recommendations to stay ahead in this dynamic market.