Synopsis: Indian metal stocks, led by Tata Steel, JSW Steel, and Lloyds Metals, surged up to 15% in February due to strong domestic demand, margin expansion, price hikes, supportive global commodity trends, and positive brokerage outlooks.
The Indian metals space has delivered a sharp rally in February, with the NIFTY Metal index gaining around 9.5% for the month. Leading the surge are frontline names such as Tata Steel, Jindal Steel, and Lloyds Metals & Energy, which have climbed up to 15%. Meanwhile, Steel Authority of India Limited (SAIL) and Vedanta Limited have advanced up to 10%, reflecting broad-based strength across the sector.
Reasons for the surge
Several macro and structural factors are driving this momentum. A softer US dollar has supported commodity prices globally, improving realisations for metal producers. At the same time, expectations of sustained infrastructure and manufacturing demand have strengthened sentiment.
Rising aluminium and copper consumption, particularly linked to the rapid expansion of data centres and electrification trends has added another layer of support, boosting confidence in base metal producers.
On the profitability front, domestic steel companies are witnessing margin expansion in the current quarter. Price hikes of Rs. 5,000–Rs. 6,000 per tonne in flat steel products and Rs. 9,000–Rs. 10,000 per tonne in long products have significantly improved realisations. These increases are being supported by protective duties, healthy seasonal demand, and controlled imports, enabling companies to pass on higher prices without major demand disruption.
In conclusion, the surge in metal stocks this month reflects a mix of strong domestic demand, robust price hikes, margin expansion, and favourable global commodity trends. Supported by a softer US dollar, rising consumption in key metals, and positive brokerage outlooks, the sector has demonstrated broad-based strength, making it one of the top-performing segments in the market this month.
Brokerage views on Indian metals are turning increasingly bullish, with several global firms highlighting strong fundamentals and meaningful upside potential. Nomura Holdings has initiated coverage on Lloyds Metals and Energy with a “buy” rating and a target of Rs. 1,600, which is an upside of 29% from the current levels. The optimism is driven by the company’s low-cost iron ore resources secured through 2057, integrated steel operations, steady earnings visibility, and diversification into copper. Nomura projects EBITDA to surge to Rs. 10,900 crore by FY28 from Rs. 1,900 crore in FY25, implying a robust 77% CAGR over the period.
Macquarie Group believes the near-term risk to Indian steel prices is tilted to the upside, citing resilient domestic demand and pricing that remains only modestly above import parity levels even after a 9% increase since mid-December 2025. The firm has named JSW Steel as a “Marquee Buy Idea,” assigning it a target price of Rs. 1,319, which is 3.5% upside from the current levels.
In a separate development, Bank of America Securities upgraded Vedanta Limited to “buy” from “neutral,” while sharply increasing its price target by 75% to Rs. 840 from Rs. 480 earlier, which is 15% upside from the current levels. Overall, brokerages appear constructive on the sector, underpinned by strong domestic demand, improving earnings visibility, and supportive pricing dynamics.
Kotak Institutional View on Aluminium
Aluminium demand is expected to grow structurally at 2–3% annually, driven by energy transition investments, data centre expansion, and rising substitution from copper as the copper-to-aluminium price ratio hovers near 4x well above historical switching thresholds.
However, supply growth remains constrained. China has capped aluminium smelting capacity at 45 million tonnes, while regions outside China including the United States and across Europe and Africa are facing power shortages and lack long-term electricity contracts needed to sustain smelters. With limited new capacity additions globally, aluminium prices are expected to stay supported at levels that incentivise fresh supply, reinforcing a favourable outlook for producers.
Kotak Institutional Equities has given its view on metals stocks, recommending a Sell rating on NMDC with a target price of Rs. 78, Add on Jindal Steel with a target of Rs. 1,200, and Add on JSW Steel with a target of Rs. 1,300.
The brokerage has also assigned a Sell rating on SAIL with a target of Rs. 105 and on Tata Steel with a target of Rs. 160. Separately, on Vedanta, Kotak Institutional Equities has a Buy rating with a target price of Rs. 890.
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