Steel stocks rise up to 4%, check JPMorgan’s top picks as it expects demand to accelerate – CNBC TV18
| Company | Value | Change | %Change |
|---|
“India’s coking coal and PCI coal imports now appear to be increasing swiftly for the private sector steelmakers JSW Steel, Tata Steel and Jindal Steel and Power,” the brokerage said, adding that its analysis suggests Oct-Nov volumes have increased 25% YoY for these three players, however, SAIL continues to be a drag with volumes declining 5% YoY. Overall, volume growth came in at 6% YoY, the brokerage said.
On December 11, the sectoral index Nifty Metal traded a percent higher with Vedanta and Hindustan Zinc rose almost 4% while Hindalco and Tata Steel were up a percent.
| Stocks in Nifty Metal | |
| Company name | Change |
| (%) | |
| Vedanta | 3.93 |
| Hind Zinc | 3.39 |
| Hindalco | 1.06 |
| Tata Steel | 0.76 |
| SAIL | 1.09 |
| NALCO | 1.23 |
| NMDC | 0.69 |
| Jindal Stainles | 0.72 |
| Jindal Steel | 0.35 |
| JSW Steel | 0.09 |
| Hind Copper | 0.41 |
| Ratnamani Metal | 0.42 |
| Welspun Corp | 0.25 |
| Adani Enterpris | -0.12 |
| APL Apollo | -0.83 |
JPMorgan said it prefers JSW Steel and Tata Steel with an overweight stance and remains neutral on SAIL.
According to the brokerage, India’s finished steel production growth for the top seven steelmakers has been soft YTD (+1% YoY) and November demand appears to have been impacted slightly by the construction activity ban in NCR amid pollution concerns.
Reflecting on the outlook, JPMorgan believes the pace of steel demand growth should accelerate hereon with elections and monsoons behind us.
“Further, average coking coal stock for the industry is slightly below the four-year average and could necessitate increased buying in the next few months,” it added.
The brokerage also noted that increasing news flow around China stimulus and the Indian steel Ministry potentially considering a safeguard duty on steel imports are positive catalysts, while a focus on optimizing coking coal blends by steelmakers could drive cost savings.
“Our China economists highlight that the Politburo’s positive policy tone is in line with our policy outlook,” it added.
