Jefferies has struck a constructive view on the Indian metals sector heading into 2026, citing improving demand-supply dynamics, policy support and a recovery in key commodity price spreads after a prolonged period of weakness.
The brokerage expects Indian steel volumes to grow at a CAGR of 6–9% over FY26–28E, supported by steady infrastructure spending and a supportive domestic policy environment. Jefferies believes that the safeguard duty on steel imports should help protect domestic pricing and margins, particularly as Asian steel spreads recover from levels near 15-year lows.
In non-ferrous metals, Jefferies highlighted that higher silver, zinc and aluminium prices are likely to provide earnings tailwinds for companies such as Hindustan Zinc and Hindalco Industries. Improving price realisations, combined with operating leverage, are expected to drive stronger profitability over the next two years.
Reflecting this improved outlook, Jefferies has raised FY27–28 earnings estimates by 4–17% across its coverage, including Tata Steel, Jindal Steel, Jindal Stainless, Hindustan Zinc and Hindalco. The brokerage identified Tata Steel, Jindal Steel and Jindal Stainless as its top picks within the sector.
Jefferies added that while global macro risks persist, the combination of domestic demand resilience, supportive policy measures and cyclical recovery in spreads creates a favourable risk-reward for Indian metal producers entering 2026.
Disclaimer: The views and recommendations above are those of Jefferies. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
