Tata Steel, JSW Steel: Why Jefferies sees buying opportunity in these metal stocks

Brokerage firm Jefferies has reiterated its preference for steel stocks within the Indian metals space, flagging a disconnect between recent stock performance and improving fundamentals. According to the brokerage, shares of Tata Steel and JSW Steel have corrected around 9–10% since the escalation of the West Asia conflict. This comes despite a roughly 6% rise in domestic steel prices during the same period—creating what Jefferies sees as a potential buying opportunity.

Earnings outlook remains strong

Jefferies expects both companies to deliver robust EBITDA growth of 30–45% year-on-year in FY27E, supported by improving global and domestic dynamics.

Key drivers behind the bullish stance

1. China’s supply-side adjustment

Steel production in China has declined 9% year-on-year over the past five months, while net exports dropped 6% in the January–February 2026 period. This easing supply is helping rebalance global markets.

2. Recovery in Asian spreads

Asian conversion spreads, which had fallen to near 15-year lows, are showing signs of recovery. Current spot spreads are about 9% higher than the March quarter average, although still 35% below the long term averages. 

3. Scope for domestic price gains

Jefferies expects a mean reversion in Asian spreads to push Indian steel prices to around ?64,900 per tonne, compared with current spot levels of ?57,500.

Risks to watch

The brokerage flagged that an extended conflict in West Asia could dampen domestic demand. However, it emphasised that earnings sensitivity remains higher to price movements than to volume changes.

In the latest session, JSW Steel shares gained 1.94% to close at Rs 1,155.85, whereas Tata Steel stock ended 0.99% higher at Rs 198.60.