Metals Q1 Results Review - A Quarter Of Positive Surprises: ICICI Securities

ICICI Securities Report

After a hiatus of three quarters, Q1 FY24 was steady for the metal sector companies under our coverage. Key points:

1. earnings of most companies surpassed consensus estimates;

2. working capital accretion primarily led to higher debt;

3. target prices for most stocks were raised by the street – though Ebitda estimate revision was a mixed bag; and

4. stock reaction post results was most positive for Jindal Steel and Power Ltd. and Tata Steel Ltd.

Going ahead, we believe the ferrous companies will continue to be at a relative advantage as steel prices have bottomed out and lower coking coal price booked from March 2023 flows into the profit and loss.

In the case of non-ferrous though, the adverse macros and still-high inflationary concerns are likely to keep London Metal Exchange prices (hence stock performance) capped.

Top picks: Jindal Steel (target price: Rs 810; 'Buy') and Tata Steel Ltd. (target price: Rs 135; 'Add').

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