Not Tata Steel, But These 5 Metal Stocks To Buy, 3 Are PSUs; Prabhudas, Motilal, Axis Sec Recommendations!

Metal stocks are in trend as expectations of as early as June 2024 rate cut take round. Apart from this, it is believed that the gradual stabilization of the Chinese economy is likely to aid domestic consumption and further help steel pricing which will play a key role for Indian steelmakers. Amidst this, three brokerages have recommended buying in 5 metal stocks. And it is not Tata Steel, the largest steel company in India in terms of market share.

Among these top 5 metal stocks picked, 3 are PSUs with Maharatna and Navratna status. Tata Steel is currently already near its all-time high levels, and chances are that it may see corrections going forward.

Tata Steel: (CMP: Rs 163.35)

On Tata Steel, Prabhudas Lilladher has an Accumulate rating but the target price has been trimmed to Rs 137. Similarly, Motilal Oswal has trimmed the target to Rs 130 on Tata Steel with a Neutral rating.

So what makes the other 5 metal stocks well-placed for buying? Let's Find Out!

Hindalco: (CMP: Rs 569.90 On BSE)

Prabhudas Lilladher has recommended BUY for a target price of Rs 597. Hindalco is also among the top picks of Motilal Oswal and Axis Securities.

With a BUY rating, Motilal Oswal has set a target price of Rs 600. But Axis Securities has set the highest target price.

Axis' note said, "We see multiple levers to increase Novelis' EBITDA/t above $525/t in the medium term. Upstream Aluminum business is expected to benefit from higher LME Aluminum prices and lower thermal coal prices. Custom copper smelter has TcRc contracts in place for CY24 which protects it from the recent fall in the spot TcRc. We have a BUY rating on Hindalco with a TP of Rs 660. Update on the Novelis IPO proceeds and update on capex of Bay Minette project will be the key factor to monitor and remains a key risk."

National Aluminium: (CMP: Rs 177.40)

In its research note, Axis Securities said, "NALCO is consistently operating at its peak refining and smelting capacity, and the recent softness in thermal coal prices has led to lower Power costs. The company will also be ramping up its captive coal blocks. Capex overrun towards the 5th stream of the Alumina refinery remains the key risk for the core business. NALCO also has ventured into Lithium exploration with its JV Khanij Bidesh India Limited (KABIL) entering an agreement with Argentina's CAMYEN SE for the exploration and mining of 5 Lithium brine blocks in Argentina, at an initial cost of Rs 200 Cr."

Axis has said that it will revise its target after the Q4 results of the company.

Coal India: (CMP: Rs 446.90)

Brokerage Motilal Oswal has suggested buying in this Maharatna PSU stock for a target price of Rs 520 apiece. In its note, Motilal said, "Coal India's 3QFY24 results show strong performance and continued volume momentum. Revenue rose 3% YoY, in line with estimates, driven by higher volumes and realization. Adjusted EBITDA increased 6% YoY, beating estimates, due to lower costs. APAT increased 17% YoY, driven by strong operating performance and lower depreciation." It added, " Outlook remains positive with increased EBITDA estimates and attractive valuation."

NMDC: (CMP: Rs 217.85)

Prabhudas Lilladher has a buy rating for a target price of Rs 247 apiece on this Navratna PSU metal company. Motilal Oswal has set a huge target of Rs 260 on the stock with a buy recommendation as well.

As per Motilal, NMDC, the largest domestic iron ore miner, is expected to surpass 50mt of production by FY25E. The company's volume growth and capacity enhancement projects will drive the company's performance. Further, its domestic steel sector is well placed, with NMDC commanding a 16% market share.

It needs to be noted that NMDC has reduced prices in line with the correction in international prices. Also, the company has planned capex for evacuation and capacity enhancement projects to reach a total capacity of 100mt. Motilal said, " NMDC trades at attractive valuations with a P/E of 9.5x and P/BV of 2.3x."

JSW Steel: (CMP: Rs 856.50)

Prabhudas sees JSW Steel's share rally up over the Rs 900 mark. The brokerage has recommended buying for a target price of Rs 958 apiece. Although Motilal has maintained Neutral on the stock, it has set a higher target as well to the tune of Rs 910 apiece.

Some of the key highlights by Motilal on JSW Steel are that -- JSW Steel posted consolidated revenue of INR419b, in line with estimates in Q3, while EBITDA stood at INR72b, 9% above estimates. Also, APAT stood at INR23b, 9% above estimates. The company further logged record dispatches to OEM, auto, RE, and packaging sector-supported performance. Meanwhile, its Net debt increased to INR792b in 3QFY24.

Motilal believes that JSTL expects coking coal costs to increase in 4QFY24.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor 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.