Tata Steel To Hindalco: Top Metal Stocks to Buy after Strong Q4 Results

Metals & Mining sector delivered a strong performance in Q4FY25, bouncing back with improved margins and solid earnings, even as global uncertainties and macroeconomic challenges continued to put pressure on markets.

Despite concerns around tariffs and soft commodity prices, several companies posted impressive numbers, making the sector attractive for long-term investors, notes Axis Securities.

In Q4FY25, the Metal & mining sector grew 33.3% above earnings estimates, driven by robust results from aluminium, steel, and coal companies. Following this revised EPS estimates for FY26 and FY27 suggest that the sector could see over 23% year-on-year growth, highlights a JM Financial report.

Q4FY25: Key Highlights

• Hindalco posted a consolidated revenue of Rs 64,890 crore (2% above estimates) and EBITDA of Rs 9,609 crore (9% above expectations), thanks to strong domestic operations offsetting weaker global performance at Novelis.

• NALCO significantly outperformed with revenue of Rs 5,268 crore (+29% vs consensus) and EBITDA of Rs 2,754 crore (+52%), supported by strong alumina and aluminium operations and reduced costs.

• In the steel segment, Tata Steel saw a 5% quarter-on-quarter (QoQ) increase in revenue and an 11% QoQ jump in EBITDA to Rs 6,559 crore, aided by lower coal prices.

• SAIL reported EBITDA of Rs 2,797 crore (2% above estimates), driven by higher volumes.

• APL Apollo Tubes impressed with an 18% YoY and 17% QoQ rise in EBITDA per tonne, reaching Rs 4,864.

• In contrast, JTL Industries faced a 51% YoY drop in EBITDA due to higher input and operational costs.

Steel Sector Outlook:

Steel spreads are expected to improve in Q1FY26, with Tata Steel's Indian NSR rising about Rs 3,000/t QoQ and European NSR up €20-30/t. Coking coal costs should decline by $10/t QoQ for both regions. SAIL's imported coal costs may drop by Rs 1,000/t, while steel HRC prices have recovered 9% YTD, supported by a new safeguard duty protecting domestic steel.

Aluminium Sector Outlook:

Although LME aluminium prices rose 19% YoY in Q4FY25, they softened in Q1FY26 due to falling alumina prices and U.S. tariffs. Guinea's alumina supply is stabilising, though risks persist. The global primary aluminium market is expected to stay in a deficit of 0.4 million tonnes in CY25.

Sector View from Analysts

Gaurang Shah, Senior Vice President at Geojit Financial Services, believes that Current global uncertainties and news flow are impacting the metal sector. However, domestic consumption is steadily rising, and input costs are declining; both are encouraging signs for the industry.

"Domestic infrastructure development and capital expenditure (CapEx) will serve as key growth drivers. We expect earnings to improve meaningfully over the next two to three quarters," Shah said.

He also noted that there is potential for domestic flat and long product prices to be revised upwards in the near future. The recent increase in tariffs from 25% to 50%, which came into effect yesterday, along with new developments in China, are having a direct impact on the metal sector.

Axis Securities says that Metals & Mining sector stands resilient amidst lot of geopolitical uncertainties and news, and we believe the sector could provide 'Buy on Dips' opportunities for investors.

Key Concerns

The Metal & Mining sector is currently facing several challenges that are shaping market sentiment and future outlook:

• The impact of U.S. tariffs, which could affect global trade flows.
• Uncertainty about the Federal Reserve's interest rate cut trajectory, which influences liquidity.
• Geopolitical risks, particularly related to China's stimulus plans, which could shift market sentiment and pricing dynamics.

Stock Picks & Recommendations

Axis Securities has recommended the following stocks based on strong Q4FY25 results and sector outlook:

• Hindalco - BUY | Target Price: Rs 775
• APL Apollo Tubes - BUY | Target Price: Rs 2,035
• NALCO - BUY | Target Price: Rs 220

Gaurang Shah also suggests that investors with a two-year investment horizon consider the following stocks for long-term gains:

• Tata Steel
• JSW Steel
• Jindal Steel & Power Ltd
• Hindalco
• Vedanta
• NMDC