Morgan Stanley has reiterated a constructive stance on the Indian steel sector, citing a favourable policy environment and improving medium-term fundamentals that could support an expansion in steel spreads. The brokerage believes domestic steel prices have received a meaningful policy uplift, improving earnings visibility for producers.
Morgan Stanley highlighted that China’s “anti-involution” stance, aimed at curbing destructive competition, remains an important medium-term theme for global steel markets. Alongside this, supportive global macro factors and steady domestic demand are expected to aid profitability across the sector.
Within its coverage, the brokerage upgraded Jindal Steel & Power Ltd. (JSPL) to overweight from equal-weight, while raising the target price to ₹1,250 per share, reflecting improved confidence in earnings sustainability. At the same time, Morgan Stanley downgraded SAIL to underweight from equal-weight, assigning a target price of ₹140 per share, citing relative positioning concerns.
The brokerage maintained its overweight stance on Tata Steel, while raising the target price to ₹215 per share, and retained overweight on JSW Steel, increasing the target price to ₹1,330 per share. Morgan Stanley believes these names are best positioned to benefit from improving spreads, disciplined capacity additions and policy tailwinds.
Overall, the brokerage remains positive on the steel cycle, with pricing discipline and macro support underpinning its sector outlook.
Disclaimer: The views and recommendations above are those of Morgan Stanley. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
