Metal sector outlook India 2026: Nomura maintains a bullish stance on the Indian metals sector, specifically identifying Tata Steel, JSW Steel, and Jindal Steel as its top ”Buy” recommendations. Despite a challenging environment marked by “softer realisations,” the brokerage expects the industry to report a 5-6% year-on-year improvement in domestic volumes.
The international brokerage highlighted that “decline in EBITDA per tonne, driven by lower steel prices and rising input costs, particularly imported coking coal, which increased by $16/t sequentially.”
Nomura on Tata Steel: ‘Buy’
Nomura expects Tata Steel‘s India operations to show resilience with a 12% year-on-year volume increase in 3QFY26. While the domestic segment remains strong, the brokerage notes that the European business is likely to report a 9% volume decline and slip into a marginal EBITDA loss of EUR 10/t. On a consolidated basis, realizations are expected to decline, but Nomura predicts that lower raw material costs will partially cushion margins. According to the report, “Tata Steel’s India operations are likely to be resilient with 12% y-y volume growth in 3QFY26F.” The brokerage has set a Target Price of Rs 215 for the stock. Based on the closing price of Rs 184 as of January 7, 2026, this represents an estimated upside of approximately 16.8%.
Nomura on JSW Steel: ‘Buy’
JSW Steel is projected by Nomura to see a 14% year-on-year increase in consolidated volumes, reaching 7.6MT, largely supported by contributions from JVML. However, the brokerage points out that its standalone operations are being impacted by a 150-day shutdown of Blast Furnace 3 at Vijayanagar, which began in September 2025. Nomura estimates a consolidated EBITDA decline of around Rs 2,200/t due to lower domestic HRC prices and higher coking coal costs. The report states, “We expect JSW Steel standalone and Tata Steel standalone to report Rs 1,900-2,000/t q-q declines in realizations.” The brokerage maintains a Target Price of Rs 1,300, indicating a potential upside of approximately 12.0%.
Nomura on Jindal Steel: ‘Buy’
Nomura expects Jindal Steel to lead in volume growth with a 15% year-on-year improvement to 2.2MT, aided by the ramp-up of a newly commissioned Blast Furnace (BF). Despite this growth, the brokerage warns the company may face the steepest sequential EBITDA decline of Rs 3,000/t. Nomura attributes this to a “higher proportion of lower-value slabs and semis in the product mix” and elevated start-up costs associated with the new BF. The report notes, “We expect Jindal Steel standalone to report an Rs 3,000/t sequential drop in realizations due to a higher proportion of slabs in the product mix.” The brokerage has assigned a target price of Rs 1,150, which suggests an upside of approximately 14.1%.
HRC vs rebar prices
The Nomura report notes a significant divergence in steel pricing during Q3FY26. While domestic HRC prices saw a sharp decline of Rs 2,400/t, average domestic rebar prices remained relatively stable, falling by only Rs 700/t. According to the brokerage, this shift turned the flat-long spread unfavorable for flat products during the quarter. Nomura observes, “Average domestic HRC prices declined by Rs 2,400/t q-q in 3Q, while average domestic rebar prices declined by just Rs 700/t q-q.” Consequently, Nomura expects companies like JSW and Tata Steel to perform slightly better sequentially than Jindal Steel, as the latter’s product mix was more heavily impacted by realization drops.
The raw material tug-of-war
Indian steel producers are currently maneuvering a complex cost environment. Nomura indicates that domestic iron ore prices moderated (down approximately Rs 280/t q-q), which should typically benefit margins. However, the brokerage notes these gains are being offset by rising coking coal prices. Nomura explains, “We expect the benefit of lower domestic iron ore prices to be more than offset by increasing coking coal prices in 3QFY26F.” For instance, JSW Steel is expected to witness roughly $5/t higher coking coal costs, which Nomura believes will neutralize the benefits of cheaper iron ore consumption.
Conclusion
While the Indian steel industry faces a temporary squeeze on margins due to volatile raw material costs and softening domestic HRC prices, Nomura remains bullish on the sector’s long-term prospects. The brokerage’s ”Buy” ratings on Tata Steel, JSW Steel, and Jindal Steel are supported by robust domestic demand and significant capacity expansions. Nomura expects these factors to drive “steady-state EBITDA growth in the coming years.”
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.