India’s metals and mining sector delivered a largely resilient performance in the fourth quarter of FY26, supported by elevated commodity prices, strong domestic demand and continued operational efficiencies, according to Axis Direct’s latest sector review.
While global macroeconomic uncertainty, energy market volatility and geopolitical tensions remained key overhangs, most companies under the brokerage’s coverage reported earnings that either met or exceeded expectations.
Among aluminium manufacturers, Hindalco’s operations in India and Novelis contributed to earnings growth, while NALCO benefited from effective cost management, though its performance was softer than the previous quarter. In the steel sector, Tata Steel delivered results that exceeded expectations, driven by record sales volumes and improved profitability in major regions.
The brokerage also noted strong performance by SAIL, which reported healthy earnings growth driven by better realisations and lower raw material expenses. At the same time, APL Apollo Tubes maintained solid profitability amid weak industry demand, bolstered by higher-value products and a strong brand presence.
Coal India remained the notable exception, reporting weaker-than-expected earnings due to lower stripping activity and higher employee costs. Overall, Axis Direct believes the sector remains well-positioned, supported by strong balance sheets, ongoing capacity expansions, and favourable long-term demand trends across infrastructure, construction, and manufacturing.
Top Conviction Ideas
APL Apollo Tubes
Axis Direct has reiterated its bullish stance on APL Apollo Tubes and included the stock among its top conviction ideas in the metals and mining space, assigning a ‘Buy’ rating with a target price of ₹2,250.
According to the brokerage, APL Apollo Tubes Limited delivered a resilient performance in Q4FY26 despite facing challenges such as war-related disruptions, energy shortages and inventory destocking during the latter part of the quarter. The company maintained EBITDA of around ₹5,500 per tonne, supported by its strong brand positioning, favourable product mix and supply tightness in the steel tubes market. Management remains confident of sustaining EBITDA at ₹5,000-5,500 per tonne, even in a volatile operating environment.
Axis Direct noted that the company is prioritising profitability over volume growth in the near term. While demand uncertainty and macroeconomic headwinds may lead to softer volumes, management’s focus on protecting margins and enhancing absolute EBITDA is expected to support earnings growth.
The brokerage also highlighted APL Apollo’s strong cash generation and balance sheet. FY26 operating cash flow stood at around ₹2,000 crore, while free cash flow increased sharply to ₹1,336 crore. Net cash rose to approximately ₹1,500 crore, providing flexibility for future expansion, dividends and potential share buybacks.
Looking ahead, Axis Direct believes the company’s Vision 2030 strategy remains a key growth driver. APL Apollo plans to double its production capacity to 10 million tonnes by FY30, from the current 5 million tonnes, supported by greenfield expansions, debottlenecking initiatives, and an increased focus on speciality tubes. The brokerage expects these investments to strengthen the company’s market leadership and support long-term growth.
Hindalco Industries
Axis Direct has maintained a ‘Buy’ rating on Hindalco Industries with a target price of ₹1,220, citing the company’s strong expansion pipeline, improving prospects in the copper business and steady progress at its Novelis operations.
According to the brokerage, Hindalco Industries Limited has a robust list of growth projects underway, including the Aditya alumina refinery expansion, aluminium smelter capacity additions at Aditya and a copper recycling facility, all of which are expected to support long-term earnings growth. The company has also announced a second-phase expansion at Aditya Aluminium, scheduled to become operational by FY29.
Axis Direct noted that capital expenditure is likely to remain elevated in FY27 as Hindalco continues investing in both its India and Novelis businesses. While leverage may rise during the expansion phase, management remains comfortable with its balance-sheet position.
The brokerage is particularly positive on the copper segment, where a 300-kilotonne brownfield smelter expansion in Gujarat is expected to be commissioned by FY29. The project is likely to significantly increase copper smelting capacity and improve profitability over the coming years.
Axis Direct also highlighted steady progress at Novelis’ Bay Minette project, with full commissioning expected in the second half of CY26, reinforcing its positive outlook on the stock.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
