Best steel stocks to buy: JSW Steel, SAIL - Why Aditya Birla Money is betting on capacity growth and margin recovery
Indian steel stocks could be poised for a sustained upcycle as tightening supply, resilient demand and protectionist trade policies support prices, according to Aditya Birla Capital. The brokerage has initiated coverage of JSW Steel and Steel Authority of India (SAIL), assigning Buy ratings to both, citing capacity expansion and margin recovery, respectively. It has assigned Add ratings to Tata Steel and Jindal Steeland initiated coverage of ArcelorMittal with a Positive view.
JSW Steel is the brokerage’s preferred long-term compounder, backed by consistent capacity additions, while SAIL offers a margin recovery opportunity.
Aditya Birla Capital has set a target price of ₹1,425 for JSW Steel, implying an 18% upside from its current market price of ₹1,220 as of 22 October. For SAIL, the brokerage has set a target price of ₹225, indicating a potential upside of 36.8% from ₹170.
Tata Steel has a target price of ₹190 against its current market price of ₹172, implying an upside of 12.7%. Jindal Steel has a target price of ₹1,075 versus ₹1,028, indicating an upside of 8.6%.
For international investors, the brokerage has initiated coverage on ArcelorMittal with a Positive view. It highlighted the company's ambition to expand its capacity in India to 40 million tonnes from the current 9 million tonnes.
The global steel cycle is strengthening as protectionist policies reshape trade flows and reduce the influence of cross-border import parity pricing, Aditya Birla Capital said. Measures such as the European Union's tariff-rate quotas, Section 232 tariffs in the US and India's safeguard duty are supporting regional pricing power.
The brokerage believes concerns that India's 11–12% safeguard duty will be withdrawn in 2028 may be overstated. It expects the measures to remain in place beyond 2028, supported by policy continuity and protectionist measures across major steel-consuming economies.
In its assessment, the current rally is being driven by structural policy changes rather than temporary factors, potentially making the favourable pricing environment more durable than investors expect.
The brokerage's proprietary steel supply-demand model points to a tightening domestic market. It assumes Indian steel consumption will grow at a 7.5% compound annual growth rate, while supply from major producers expands at a measured pace.
Based on its estimates, domestic steel inventories could decline from around 10 million tonnes currently to almost zero over the next three years, even as supply and demand both grow by approximately 6–8% annually.
The expected inventory drawdown could keep steel prices above their 10-year averages, although short-term inventory movements may lead to volatility.
The brokerage’s preferred exposure is therefore through JSW Steel for its capacity-led growth and through SAIL for its margin-recovery potential. Tata Steel and Jindal Steel remain additional picks, while ArcelorMittal offers a longer-term international investment opportunity linked to its planned expansion in India.
Dhanya Nagasundaram works as a Content Producer at LiveMint, specializing in news related to financial markets, stocks, and business. With over eight years of experience in journalism and content creation, she has honed her skills in data-driven reporting and market analysis. Her focus is on monitoring stock trends, initial public offerings (IPOs), corporate news, policy shifts, and larger economic trends that affect investors and market players. <br><br> At LiveMint, Dhanya consistently writes and produces articles that make complex financial topics accessible to readers. She keeps a close eye on equity markets, commodities, and macroeconomic indicators, assisting audiences in comprehending how global and domestic events influence investment perspectives. Her stories frequently underscore emerging trends within sectors, the IPO market, company earnings results, and market strategies pertinent to both retail and institutional investors. <br><br> Before her tenure at LiveMint, Dhanya accumulated a wealth of professional experience at various companies, including MintGenie, Informist, Cogenics, Chary Publications, KPMG, and the Royal Bank of Scotland. These positions allowed her to establish a solid foundation in financial research, reporting, and content creation. <br><br> Throughout her career, she has explored numerous subjects such as trading strategies, commodities, IPOs, wealth generation, corporate profits, and macroeconomic indicators. Her background in both financial journalism and corporate settings has given her the ability to tackle stories with analytical rigor while ensuring clarity for her audience. Through her contributions, Dhanya strives to deliver insightful, trustworthy, and investor-centric financial content.
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