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.
Why the steel upcycle could last longer
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The brokerage believes concerns that India’s 11–12% safeguard duty will be withdrawn in 2028 may be overstated.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.
Tightening supply-demand balance to support steel prices
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.
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