In its latest note, Jefferies said that China’s falling steel production and exports will likely lift margins of the Indian players. China’s steel exports, after hitting new record highs in 2025, have declined 9% year-on-year in the January-March quarter of 2026. “Improving steel market balance in China, driven by supply rationalization, should be positive for Asian steel spreads,” it said.
The international brokerage noted that Indian steel prices are up around 20% this year so far, outpacing the 10% rise in China’s export steel prices in the same period. This increase is supported by the implementation of a 12% safeguard duty in December 2025. “India steel prices are now broadly in-line with landed imports from China and can move higher if China’s export prices rise further. A mean reversion in Asian conversion spreads could potentially drive Indian steel prices up by a further 13% to Rs 65,800 (spot: Rs 58,000),” it added.
Jefferies bullish on JSW Steel & Tata Steel
Assuming Indian steel prices hover in the range of Rs 55,500-56,000 in FY27-28, which is 3-4% below spot prices, Jefferies expects JSW Steel and Tata Steel to post a strong 30-45% YoY EBITDA growth in FY27. Its FY27-28 EPS estimates for the two companies are 5-28% above the Street expectations. “While a prolonged Middle East conflict could weigh on domestic steel demand and pose some downside risk to near-term earnings, we note that Tata Steel and JSW Steel’s earnings are more sensitive to price movements than volumes. A 1% decline in volumes translates into a 2% EPS impact, whereas a 1% increase in steel prices drives an 5-8% EPS upgrade,” it said.The shares of the two companies are up 8-17% in 2026 so far, outperforming Nifty by 17-26%, Jefferies noted. “We believe these above-average multiples are justified given improved ROEs and upside risk to earnings. We continue to prefer steel within India metals with JSW Steel as top Buy,” it concluded.
Overall, Jefferies has a ‘Buy’ call on the shares of JSW Steel, Jindal Stainless, Shyam Metallics & Energy and Tata Steel.
Goldman Sachs on steel sector
Goldman Sachs called steel the “next global growth driver”. In its latest note, the international brokerage highlighted that India has the unique distinction of being the only major country in the world that both produces and consumes iron ore. “This vertical integration in iron ore begets structural competitive cost advantage and India has consistently the lowest cost of production among the major steel producing regions,” it said, listing out strong steel consumption, growth, cost competitiveness, better returns and market cap dominance as the key reasons why the Indian ferrous sector looks appealing.
“We expect domestic steel consumption to grow at a 6.8% CAGR through to FY32E compared to the FY23 level. Following four successive years of double digit growth in steel consumption, we expect growth to moderate to 6-7% from FY26E on a higher base. We expect exports to come off progressively due to better realization in the domestic market, firm demand and tariff barriers worldwide. We expect imports on the other hand to go up post FY30E as announced domestic capacities might not be enough to cater to the domestic demand. As a result, we expect exports to fall by a 5.6% CAGR while imports are likely to increase at a 7.8%CAGR from FY23-FY32E,” Goldman Sachs stated.
Goldman Sachs’ top steel picks
JSW Steel is one of Goldman’s top picks in the sector, due to its focus on capacity growth, debt reduction and operating leverage benefits. It has a ‘Buy’ call on the stock with a target price of Rs 1,490 apiece, which implies an upside potential of nearly 19% from the stock’s previous closing price of Rs 1,255.70 apiece on NSE.
Goldman Sachs also has a ‘Buy’ call on the shares of Shyam Metallics due to its diversified business model, while holding ‘Neutral’ rating for Tata Steel and Jindal Steel, along with a ‘Sell’ call on NMDC due to concerns on volume growth and increasing competition.
JSW Steel shares surged over 3% to trade at Rs 1,297 apiece on NSE. Tata Steel shares meanwhile gained more than 2% to trade at Rs 215 apiece. The overall Nifty Metal index gained around 2% on Monday afternoon.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)