Nomura upbeat on steel sector; raises TP on JSW Steel, Jindal Stainless

The brokerage has raised its target on JSW Steel and Jindal Steel by 7 per cent and 6 per cent, respectively, projecting Ebitda CAGR) of 25-27 per cent during FY25-28F across its coverage universe

Global brokerage Nomura has taken a bullish stance on the Indian steel sector, citing strong domestic demand, global production cuts, and the likelihood of additional policy stimulus from China. The brokerage has raised its target on JSW Steel and Jindal Steel by 7 per cent and 6 per cent, respectively, projecting an Earnings before interest, tax, depreciation and amortisation (Ebitda) compound annual growth rate (CAGR) of 25–27 per cent during FY25–28F across its coverage universe.

 

The new target for JSW Steel is set at ₹1,300 (earlier ₹1,220), and for Jindal Stainless at ₹1,150 (earlier ₹1,080). 

China’s production cuts and stimulus may aid margins

China’s crude steel production in Jan–Jul’25 stood at 594.5MT, a decline of 2 per cent year-on-year (Y-o-Y), as the government pushed state-owned mills to cut output by 5 per cent, or 50MT, under its “anti-involution” measures. Analysts estimate a further 9 per cent Y-o-Y reduction in production between Aug–Dec’25, keeping monthly production at the low end of the five-year range.

 

 

Further, as 2HCY25 kicks off, China’s property market is entering its fifth year of correction. The brief recovery seen after the policy pivot in September 2024 has already faded, with large cities—key export hubs—facing renewed headwinds amid slowing external demand.

 

New housing starts fell to a decade-low in Aug’25, while residential prices dropped 20 per cent month-on-month (M-o-M). Over the past four years, Beijing has announced multiple rounds of stimulus to stabilise the sector, and analysts expect fresh property-focused measures in H2CY25, possibly announced at the 4th Plenary Session of the Communist Party in October. 

 

Incremental policy support and demand-side reforms are expected to reduce net steel exports and offer support to hot-rolled coil (HRC) prices, according to Nomura.   Track Stock Market Live Updates

India’s steel sector growth remains robust 

In India, steel consumption and production is increasing despite price moderation. In the first four months of FY26, crude steel production rose 9 per cent Y-o-Y and apparent consumption increased 8 per cent Y-o-Y, underscoring healthy momentum across end-use industries. After the safeguard duty imposition, net imports for Apr–Jul’25 declined to 0.37MT from 0.99MT a year earlier, with shipments from countries with which India has a free-trade agreement (FTA) and China down about 30 per cent Y-o-Y. This sharp drop curtailed import pressures and provided pricing support to local producers.

 

Although seasonal weakness has pulled domestic HRC prices to an 8 per cent discount to China parity and 3 per cent below FTA parity, Nomura expects import discipline and strong demand to push prices 5 per cent above spot levels in H2FY26F.

 

The brokerage also expects safeguard duty to get extended in line with the recommendation of the Directorate General of Trade Remedies (DGTR). Overall, robust consumption, import discipline, and improving pricing dynamics support a constructive outlook for the sector.