The S&P BSE Metal Index fell 8.33% against the Sensex’s flat performance on Monday.
,, And & power decreased by about 11-18%. The mining chief lost 12.44% as 45-50% export duty was levied on iron ore and gram.
Brokerage analysts such as CLSA,
And downgrade stocks like Tata Steel, JSW Steel and Jindal Steel.
“As prices are now driven by export parity philosophy, this could lead to a sharp correction in steel prices in India,” the CLSA said, cutting EBITDA estimates (interest, taxes, depreciation and earnings before payments) for steel companies. Up to 24%.
“The price of coking coal and iron ore is low and a tight global balance is unlikely to offset it.”
CLSA downgraded Tata Steel to perform less than buy, JSW Steel to sell less performance and Jindal Steel to perform less than purchased. The target price of Tata Steel has been increased from ₹ 1,645 to ₹ 1,120, JSW Steel from ₹ 770 to ₹ 550 and Jindal Steel from ₹ 695 to 40 540. The CLSA said, “We do not see any near-term reverse catalysts for this sector in China without stimulus.”
More than 90% of India’s finished steel export basket has been affected by export tariffs, making it unrivaled in the world market. Exports have accounted for about 11% of India’s total steel production in the last two fiscal years, with manufacturers making an additional margin of $ 100-150 per tonne on exports compared to the domestic market.
With the imposition of tariffs, India’s steel exports will drop from 18.3 million tonnes in FY22 to 9-11 million tonnes in FY23, finished and semi-finished, according to director Hetal Gandhi.
Research. Gandhi estimated that the decline in exports would reduce the consumption of steel makers by 4 percentage points to 78-80%.
ICICI Securities downgrades Tata Steel, Jindal Steel, JSW Steel and
The ‘downgrade’ rating is due to the government’s move to disrupt the operating margin growth cycle, which will take effect in the next three to four quarters.
“With a broad potential impact of about 30% of Indian EBITDA, the event has had little impact on the sector,” said ICICI Securities.
IIFL Securities downgraded Tata Steel and Jindal Steel and downgraded JSW Steel and Sales for sale. The firm sees a sharp decline in domestic profits for all domestic producers for the current and upcoming financial year. With the focus on controlling inflation, brokerages are not looking to reverse these measures anytime soon.
According to a report, domestic steel prices may revise by 10-15% next month due to improved supply during the monsoon season and softer demand.
Up to 15% near-term adverse stock reactions are expected in ferrous stocks with stainless steel players and significant operating leverage, such as SAIL losses. Analysts at the brokerage said the notice did not specify a time frame for which export duties would take effect, adding to the uncertainty surrounding these stocks.