Safeguard duty: Tata Steel, Jindal Steel top metal stock picks, says Antique

Antique Stock Broking said the extension of safeguard duty on key flat steel products strengthened the domestic steel outlook and reiterated Tata Steel Ltd and Jindal Steel Ltd as its top picks in the sector, citing strong domestic demand, improving price realisations, and company-specific capacity additions.

The brokerage maintained its 'Buy' ratings on Tata Steel with a target price of Rs 199 and Jindal Steel with a target price of Rs 1,171, while retaining 'Hold' on SAIL with a target of Rs 129 and JSW Steel Ltd with a target of Rs 942.

Antique said provisional Joint Plant Committee data showed domestic finished steel consumption rose 7.4 per cent year-on-year to about 105.2 million tonnes during April–November 2025, underscoring resilient demand. While Chinese steel exports remained elevated, up 6.3 per cent year-on-year at 107.7 million tonnes during January–November 2025, the brokerage said the government’s decision to extend safeguard duty for three years should help domestic producers by supporting realisations and curbing imports.

The brokerage noted that safeguard duty rates are set at 12 per cent till April 2026, 11.5 per cent till April 2027, and 11 per cent till April 2028. Following the extension, finished steel imports declined 36.3 per cent year-on-year during April–November 2025. In anticipation of the duty extension, domestic prices recovered month-on-month, with hot-rolled coil, cold-rolled coil and rebar prices rising 5.5 per cent, 2.1 per cent and 5.8 per cent, respectively. Spot domestic HRC prices were trading at a discount to Chinese import parity prices.

Antique said while Q3FY26 was likely to be impacted by softer steel prices, Q4FY26, which is seasonally the strongest quarter for demand, could further support domestic prices. However, the brokerage cautioned that the commissioning and ramp-up of new domestic capacities, along with weak global steel prices, were expected to limit the upside for domestic steel prices, as reflected in only a marginal increase in HRC prices when provisional safeguard duty was imposed in April 2025.

On stock preferences, Antique said it favoured steelmakers with strong market presence, higher raw material integration, low leverage, and greater domestic exposure. Jindal Steel, with around 49 per cent flat products in its portfolio, had recently commissioned blast furnace-II with 4.6 million tonnes per annum capacity and basic oxygen furnace-II with 3 million tonnes per annum capacity at Angul, Odisha. The company was targeting an exit liquid steel capacity of 15.6 million tonnes per annum and finished steel capacity of 13.8 million tonnes per annum by FY27.

Tata Steel, with about 75 per cent flat products exposure, was ramping up its 5 million tonnes per annum Kalinganagar blast furnace and 2.2 million tonnes per annum cold rolling mill complex. Antique said these additions should aid volume growth and improve product mix, while ongoing cost optimisation initiatives were expected to partially offset weaker steel prices.

On the global front, Antique said Chinese steel prices continued to soften, with Chinese HRC export prices at about $445 per tonne, down 6 per cent versus the 2Q FY26 average and 9.2 per cent year-on-year. Chinese domestic steel prices stood at around $467 per tonne, lower by 1.9 per cent sequentially and 2.1 per cent year-on-year. Chinese crude steel production declined 4.6 per cent year-on-year to 881.9 million tonnes during January–November 2025, and further production rationalisation could support global steel prices.

Domestic steel prices in Q3FY26 remained lower year-on-year, with average HRC prices at Rs 47,177 per tonne, down 1.2 per cent, and rebar prices at Rs 47,254 per tonne, down 12.1 per cent. However, spot domestic HRC prices at Rs 48,650 per tonne were trading at a 7.8 per cent discount to Chinese import parity prices, while spot rebar prices at Rs 49,000 per tonne were at a slight premium to HRC.

Antique said coking coal prices were higher sequentially but lower year-on-year, with Q3FY26 average spot prices at about $199.9 per tonne, up 9 per cent quarter-on-quarter. Companies such as Tata Steel and Jindal Steel were expected to be partially insulated due to raw material integration and overseas mining assets, while higher volumes in the seasonally stronger second half should aid operating efficiency.

Antique said domestic steel demand prospects remained robust, with the World Steel Association projecting India’s steel demand to rise 8.9 per cent year-on-year to 161.1 million tonnes in calendar year 2025 and a further 9.1 per cent increase in calendar year 2026.