660% Dividends: Tata Steel To NMDC: Steel Prices To Improve Ahead, PL Recommends On 5 Top Dividend Stocks

Metal stocks slipped into a free fall on January 17 led by government-backed Steel Authority of India (SAIL) and Tata Steel who were top bears with a downside of 4-5.2%. Stocks dropped in the range of 1-5%. The bearish trend was fuelled by a drop in metal prices in the international markets. However, brokerage Prabhuas Lilladher believes that imports have subsided in the sector, and steel prices are likely to improve gradually ahead. The brokerage has recommended BUY and ACCUMULATE on 8 top dividend-paying metal stocks.

Currently, steel prices dipped on the backdrop of the strengthening in the dollar and the economic conundrum in the world's second-largest economy, China. Notably, international prices of metal and other commodities are impacted by the demand and supply movement in the two biggest economies, China and the United States.

In its research note, Prabhudas Lilladher highlighted that Chinese and European HRC prices have declined 1.7% and 1.6% WoW to
USD 570/t and USD 625/t respectively. Chinese spot spreads have risen by 2% WoW to USD 79/t. European spot spreads have risen 1% WoW to USD 134/t.

Also, brokerage revealed that stainless steel and Nickel prices have declined 1.1% and 0.9% WoW however on a yearly basis, they are down 29.1% and 40% YoY respectively. It would be interesting to hear mgmt. commentary on EBITDA guidance for two quarters.

Moreover, Indian HRC prices declined again by 0.6% WoW to Rs 54,100/t. However, iron ore lumps (63% grade) prices declined 1.3% WoW to Rs 7,400/t. Spot spreads have narrowed down to Rs18,092/t from Rs 18,398/t last week, as per PL's data.

Nonetheless, PL's channel checks suggest that imports have stopped now and export queries have started.

PL's note added, "Although 3QFY24 was significantly impacted by imports; the steel ministry has denied any safeguard duties in the near term. The HRC prices continue to trade at a discount on an import parity basis. We expect steel prices to resume an upward journey shortly as primary steel mills announced price hikes last week. Top Picks: NMDC, JSP & HNDL."

PL recommends on top 5 dividend metal stocks:

Tata Steel: Accumulate for TP of Rs 140. This Tata stock has delivered up to 360% dividends valuing to Rs 3.6 per share in 12 months. It has a dividend yield of 2.73%.

NMDC: BUY for TP of Rs 261. In the last 12 months, NMDC paid up to 660% dividend amounting to Rs 6.6 per share. Its dividend yield is at 3.2%.

Hindalco Industries: BUY for TP of Rs 673. Hindalco shares paid up to 300% amounting to Rs 3 per share. Its dividend yield is at 0.54%.

Jindal Steel & Power: BUY for TP of Rs 826. JSPL paid up to 200% dividends aggregating to Rs 2 per share in the last 12 months. Its dividend yield is at 0.28%.

JSW Steel: BUY for TP of Rs 992. JSW paid up to 340% dividend amounting to Rs 3.4 per share in the last 12 months. The stock's dividend yield is currently at 0.42%.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.