Brokerage Turns Bearish on Indian Metal Stocks, Cuts Estimates & Lower TPs

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Brokerage Turns Bearish on Indian Metal Stocks, Cuts Estimates & Lower TPs
Credit: © Reuters.

By Malvika Gurung -- Stocks of domestic metal companies continued to fall as a new week started amid rising pressures of global economic slowdown, a sharp correction in metal prices and the steel export duty imposed by the Government.

As a result, (Indian) metal stocks have underperformed the benchmark index Nifty50 by 12-34% in the Apr-Jun 2022 quarter and brokerage firm Jefferies has turned bearish on most metal stocks.

It has slashed estimates on the metal pack, mainly Hindalco (NS: HALC ), JSW Steel (NS: JSTL ) and Tata Steel (NS: TISC ) by 2-34% and believes it is too early to turn constructive, as PB valuations remain above historical troughs, earnings visibility is poor, and consensus downgrades shall continue.

Nifty Metal fell the most on Monday, compared to all other sectoral indices under the Nifty basket, with Tata Steel, JSW Steel and SAIL (NS: SAIL ) dragging the index the most.

The recent interest rate hike cycle and a downtrend in metal prices have, for the time being, brought down the bullish sentiment on steel stocks and could lead to short-term stock price volatility, stated Mohit Nigam of Hem Securities.

According to Jefferies, the sharp correction in metal prices will likely drive a big margin contraction for Indian metal companies over FY22-24. 

It has maintained a Hold rating on domestic stocks Hindalco and Tata Steel, with lower target prices of Rs 310 and Rs 830/share, respectively, while an ‘Underperform’ target on JSW Steel at a target of Rs 405 apiece, a downside of 26.6% compared to its closing price on Monday.

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  • Jack Wanderer @Jack Wanderer
    how does metal index help me in domestic trading?
    Like 0
  • sudhir joshi @sudhir joshi
    energy down, metal down & index up ,,
    Like 2

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