Nomura Bullish on Indian Metals, Flags Top 'Buy' Picks

Nomura has reiterated a positive stance on the Indian metals sector, specifically highlighting Tata Steel, JSW Steel, and Jindal Steel as its preferred 'Buy' recommendations. The international brokerage anticipates a 5-6% year-on-year increase in domestic volumes, even as the industry navigates challenges like softer realisations and escalating input costs, particularly imported coking coal which saw a $16/t sequential rise.

Tata Steel: Resilience Amidst Global Headwinds

Nomura projects Tata Steel's India operations to exhibit resilience with a projected 12% year-on-year volume growth in the third quarter of fiscal year 2026 (3QFY26). While the domestic segment is expected to remain robust, the European business is forecast to experience a 9% volume decline, leading to a marginal EBITDA loss. Consolidated realisations are anticipated to dip, but Nomura believes lower raw material costs will provide some cushion to margins. The brokerage has set a target price of ₹215 for Tata Steel, implying an approximately 16.8% upside from its January 7, 2026 closing price of ₹184.

JSW Steel: Volume Growth Supported by JVs

JSW Steel is expected by Nomura to achieve a 14% year-on-year increase in consolidated volumes, reaching 7.6 million tonnes (MT), largely driven by its joint ventures. However, the brokerage notes that standalone operations are contending with a 150-day shutdown of Blast Furnace 3 at its Vijayanagar plant, which commenced in September 2025. Nomura estimates a consolidated EBITDA decline of approximately ₹2,200 per tonne, attributed to lower domestic hot-rolled coil (HRC) prices and increased coking coal expenses. The target price for JSW Steel is set at ₹1,300, suggesting a potential 12.0% appreciation.

Jindal Steel: Volume Leader Facing Margin Squeeze

Jindal Steel is predicted to lead in volume growth with a 15% year-on-year improvement to 2.2 MT, supported by the ramp-up of a new blast furnace. Despite this expansion, Nomura warns the company may face the steepest sequential EBITDA decline of ₹3,000 per tonne. This is linked to a higher proportion of lower-value slabs and semi-finished products in its mix and elevated start-up costs for the new facility. Nomura has assigned a target price of ₹1,150, indicating an approximate 14.1% upside.

Pricing Dynamics and Raw Material Pressures

The Nomura report highlighted a significant divergence in steel pricing during 3QFY26, with domestic HRC prices falling by ₹2,400 per tonne while average domestic rebar prices saw a more modest decline of ₹700 per tonne. This trend made the flat-long spread unfavorable for flat products. On the raw materials front, while domestic iron ore prices moderated, the benefit is expected to be negated by rising coking coal costs. JSW Steel, for instance, anticipates roughly $5/t higher coking coal expenses, which Nomura believes will offset gains from cheaper iron ore.

Despite near-term margin pressures, Nomura remains constructive on the Indian steel industry's long-term trajectory, citing robust domestic demand and ongoing capacity expansions.