The brokerage house Nomura has reiterated its positive stance on India’s steel sector and continues to remain constructive on select stocks within the space. According to the brokerage report, improving domestic price trends and stable input costs are supporting the earnings outlook for key steel players despite global uncertainties.

Let’s take a look at the stock the brokerage house is bullish on and the rationale behind it –

Top buy calls: Where Nomura is placing its bets

The brokerage house Nomura has maintained its ‘Buy’ rating on four key steel companies. These include – Tata Steel, JSW Steel, Jindal Steel, and Lloyds Metals & Energy. 

According to the brokerage report, these companies are seen as better placed to handle the current environment, supported by their scale, cost structure, and operational flexibility.

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The brokerage in its report noted, “We maintain our positive outlook for the India steel sector, and global factors, especially China, should have a limited impact on the earnings potential of major steel players,” the brokerage said. The report also adds, “Our bullish stance on the India steel sector is underpinned by improving domestic price momentum despite global headwinds.”

Nomura on steel: What is driving the optimism?

As per the brokerage report, the key reason behind this outlook is the steady rise in domestic steel prices. Hot Rolled Coil (HRC), or flat steel products, have remained stable, while long steel products like rebars have seen a gradual increase. This narrowing gap between flat and long steel prices is seen as a positive trend for the industry.

Margins have also improved. This is mainly because steel prices have moved up while raw material costs such as iron ore and coking coal have remained relatively stable. 

“In line with the uptick in realizations, India’s average HRC spot margin for April 2026 (month-to-date) increased to INR 38,380 per tonne, up by over Rs 1,970 per tonne month-on-month from March 2026, remaining well above the median margin level observed over the past two years,” the report noted.

Nomura on steel: Global trends remain supportive

The positive trend is not limited to India. Steel prices in China, the world’s largest producer, have also seen some improvement. Export and domestic prices have moved up slightly, while costs have eased due to a fall in iron ore and coal prices. 

In Europe, steel prices have remained firm following the implementation of the Carbon Border Adjustment Mechanism (CBAM). This is a policy aimed at controlling carbon emissions from imports.

However, according to the brokerage report, India’s domestic demand and pricing strength are currently the bigger drivers.

Nomura on steel: Risks – What could change the outlook?

The brokerage report also highlighted a few risks that need close monitoring. 

One of them is the evolving geopolitical situation, especially in energy markets. “Given the evolving geopolitical environment, we are closely monitoring developments in energy markets and supply chains,” the brokerage said.

Another concern is related to Liquefied Petroleum Gas (LPG) and Liquefied Natural Gas (LNG), which are used in steel production processes. While their share in total cost is small, they are important for operations. Any disruption in supply could impact production. For now, companies seem prepared. “Most companies currently maintain roughly one month of inventory, providing some buffer against short-term disruptions,” the report noted.

Some companies are also taking steps to reduce dependency on such fuels. For example, Jindal Steel has started using syngas, a type of alternative fuel, in certain operations to manage supply risks.

Conclusion

On the broader front, India continues to maintain its position as a net exporter of steel. 

Production growth has remained strong. Meanwhile, consumption has grown at a slower pace.

Disclaimer: The following analysis is based on third-party brokerage views and does not constitute a direct offer or solicitation for investment. Stock market investments are subject to market risks; please consult a SEBI-registered investment advisor before making any financial decisions regarding the specific steel sector stocks mentioned. This information is for educational purposes and should not be treated as a definitive buy, sell, or hold recommendation.

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