Tata Steel, NMDC, Vedanta, JSW Steel, Nalco: Metal stocks to buy post West Asia volatility

Indian metal stocks are expected to benefit from seasonally strong volumes and a significant rise in realisations, according to ICICI Securities. Blended steel realisations are projected to increase by Rs 3,000 to 3,500 per tonne, while coking coal costs may rise by $10 to $12 per tonne. Iron ore costs are also expected to go up by Rs 450 to 500 per tonne. After accounting for raw material cost increases, most players could see Ebitda per tonne expand by Rs 2,000 to 2,500.

ICICI Securities highlights that aluminium, zinc, and copper recorded sequential increases in Q4 average realisations of 13 per cent, 2 per cent, and 16 per cent respectively. These gains were further supported by about 3% depreciation of the Indian rupee against the US dollar during the quarter. Along with improved volumes, these factors are expected to deliver a strong quarter for non-ferrous metal producers.

Non-integrated players could face iron ore cost hikes of Rs 400 to 500 per tonne. Although volume growth has moderated due to export contractions amid the Middle East conflict, most companies may see Ebitda per tonne growth of Rs 2,000 to 2,500. ICICI Securities expects NMDC Ltd, Shyam Metallics, SAIL, and Tata Steel to perform relatively better within this group.

However, volumes are expected to be mixed, and costs of production may increase by 2 to 4 per cent. Aluminium-heavy players stand to benefit the most, with Vedanta expected to continue outperforming peers. Hindalco may show recovery compared to Q3, but energy cost pressures in Novelis due to the ongoing conflict remain a concern. Nalco is also expected to post record performance despite lower volumes.

Looking ahead to Q1 FY27, ICICI Securities anticipates ferrous players to deliver strong results. Domestic spot steel prices have risen over 25 per cent since mid-December 2025 and this increase is likely to reflect in Q1 FY27 realisations. Concurrently, coking coal costs have started to taper, which supports expectations of Ebitda expansion of Rs 2,500 to 3,500 per tonne for ferrous firms.

Spot aluminium and zinc realisations have increased by 9 per cent and 1 per cent respectively, while copper has declined by 4 per cent. The rupee depreciated further by 2 per cent over Q4 averages. Combined with low volumes, these factors may lead to stable performance in the non-ferrous segment.

ICICI Securities maintains a positive outlook on the metals sector, with a preference for integrated ferrous players. Tata Steel Ltd, SAIL, and NMDC are expected to outperform their peers in the near term. APL Apollo may fall short of its guidance. In the non-ferrous segment, Vedanta remains the preferred stock.

Overall, ICICI Securities expects a robust performance from Indian metal stocks in the coming quarters, driven by higher realisations and supportive volume trends, despite some cost pressures and geopolitical uncertainties.

From the metal and mining sector, ICICI Securities has a 'buy' rating on Tata Steel (Target Price: Rs 226), Shyam Metalics & Energy Ltd (Target Price: Rs 965), Jindal Stainless (Target Price: Rs 860), Lloyds Metals And Energy Ltd (Target Price: Rs 1,540), Vedanta Ltd (Target Price: Rs 850), Gravita India (Target Price: Rs 2,045).

It has an 'add' rating on Jindal Steel (Target Price: Rs 1,205), NMDC (Target Price: Rs 90) and APL Apollo Tubes (Target Price: Rs 2,150). It has a 'hold' rating on JSW Steel Ltd (Target Price: Rs 1,150), SAIL (Target Price: Rs 145), Hindalco Industries (Target Price: Rs 900) and National Aluminium Company (Target Price: Rs 370).